KBH KB Home

Revenues Increased 10% to $1.75 Billion; Diluted Earnings Per Share Up 13% to $2.04

Repurchased $150.0 Million of Common Stock

KB Home (NYSE: KBH) today reported results for its third quarter ended August 31, 2024.

“In the third quarter, we achieved strong year-over-year growth in both revenues and diluted earnings per share,” said Jeffrey Mezger, Chairman and Chief Executive Officer. “Net orders were flat with the year ago quarter. We experienced variability in demand across the quarter, with softening in late June through July, as buyers continued to evaluate elevated mortgage interest rates, and general economic concerns were rising. As rates moderated in August, our net orders improved. We are encouraged by this strengthening in demand for our affordably priced personalized homes, and the ongoing positive trend we are experiencing so far in our 2024 fourth quarter.”

“While we navigate current market dynamics, we continue to position our Company to accomplish our longer-term objectives of profitably expanding our scale and driving higher returns. At the same time, we are maintaining a balanced approach in redeploying our cash toward reinvesting in our growth and returning capital to our stockholders. In the third quarter, we increased our investment in land acquisition and development by more than 50% year over year, to nearly $850 million, while also repurchasing $150 million of our common stock. Over the first nine months of fiscal 2024, we have repurchased approximately 5% of our shares that were outstanding at the start of the year,” concluded Mezger.

Three Months Ended August 31, 2024 (comparisons on a year-over-year basis)

• Revenues grew 10% to $1.75 billion.
• Homes delivered increased 8% to 3,631.
• Average selling price rose 3% to $480,900.
• Homebuilding operating income increased 5% to $189.0 million. The homebuilding operating income margin was 10.8%, compared to 11.3%. Excluding total inventory-related charges of $1.2 million for the current quarter and $.6 million for the year-earlier quarter, the homebuilding operating income margin was 10.9%, compared to 11.4%.
  • The housing gross profit margin was 20.6%, compared to 21.5%. Excluding the above-mentioned inventory-related charges, the housing gross profit margin was 20.7%, compared to 21.5%. These decreases were mainly due to product and geographic mix.
  • Selling, general and administrative expenses as a percentage of housing revenues were 9.8%, compared to 10.2%, primarily reflecting increased operating leverage from higher housing revenues.
• Financial services pretax income grew 11% to $11.0 million, mainly due to increased equity in income of the Company’s mortgage banking joint venture. This reflected a higher volume of both loan originations and interest rate locks, as 88% of the buyers financing their home purchases in the current quarter used the joint venture, up from 84%.
• Net income rose 5% to $157.3 million. Diluted earnings per share grew 13% to $2.04, driven by higher net income and the favorable impact of the Company’s common stock repurchases over the past several quarters.
  • The effective tax rate was 24.2%, compared to 22.9%.

Nine Months Ended August 31, 2024 (comparisons on a year-over-year basis)

• Revenues increased 4% to $4.93 billion.
• Homes delivered were up 4% to 10,191.
• Average selling price was $481,400, compared to $479,200.
• Net income grew 6% to $464.4 million.
• Diluted earnings per share increased 15% to $5.94.

Backlog and Net Orders (comparisons on a year-over-year basis, except as noted)

• Net orders for the quarter were essentially the same at 3,085. Net order value increased 2% to $1.54 billion, reflecting a higher average selling price of net orders.
  • Monthly net orders per community were 4.1, compared to 4.3.
  • The cancellation rate as a percentage of gross orders improved to 15% from 21%.
• Ending backlog homes totaled 5,724, compared to 7,008. Ending backlog value was $2.92 billion, compared to $3.40 billion.
• The Company’s ending community count grew 10% to 254, and the average community count for the quarter increased 5% to 251. On a sequential basis, the ending community count was up 3%.

Balance Sheet as of August 31, 2024 (comparisons to November 30, 2023, except as noted)

• The Company had total liquidity of $1.46 billion, including $374.9 million of cash and cash equivalents and $1.08 billion of available capacity under its unsecured revolving credit facility, with no cash borrowings outstanding.
• Inventories grew by $515.3 million, or 10%, to $5.65 billion.
  • The Company’s investments in land and land development for the nine months ended August 31, 2024 increased 59% to $2.10 billion, compared to $1.32 billion for the year-earlier period.
  • The Company’s lots owned or under contract grew 24% to 69,279, of which approximately 58% were owned and 42% were under contract. By comparison, approximately 73% of the Company’s total lots were owned and 27% were under contract as of November 30, 2023.
• Notes payable of $1.69 billion were approximately the same. The Company’s debt to capital ratio improved 90 basis points to 29.8%, compared to 30.7%.
• Stockholders’ equity increased to $3.99 billion, compared to $3.81 billion, primarily reflecting higher net income that was partially offset by common stock repurchases and cash dividends.
  • In the 2024 third quarter, the Company repurchased 1,869,292 shares of its outstanding common stock at a cost of $150.0 million, bringing its total repurchases in 2024 to 3,460,697 shares at a cost of $250.0 million, or $72.24 per share. The total repurchases represented approximately 5% of the Company’s outstanding common stock as of the beginning of the current fiscal year. As of August 31, 2024, the Company had $800.0 million remaining under its current common stock repurchase authorization.
  • Based on the Company’s 73.3 million outstanding shares as of August 31, 2024, book value per share of $54.37 expanded 13% year over year.

Guidance

The Company is providing the following guidance for its 2024 full year:

• Housing revenues in the range of $6.85 billion to $6.95 billion.
• Average selling price of approximately $490,000.
• Homebuilding operating income as a percentage of revenues in the range of 11.1% to 11.2%, assuming no inventory-related charges.
  • Housing gross profit margin in the range of 21.1% to 21.2%, assuming no inventory-related charges.
  • Selling, general and administrative expenses as a percentage of housing revenues of approximately 10.0%.
• Effective tax rate of approximately 23%.
• Ending community count in the range of 250 to 255.

The Company plans to also provide guidance for its 2024 fourth quarter on its conference call today.

Conference Call

The conference call to discuss the Company’s 2024 third quarter earnings will be broadcast live TODAY at 2:00 p.m. Pacific Time, 5:00 p.m. Eastern Time. To listen, please go to the Investor Relations section of the Company’s website at kbhome.com.

About KB Home

KB Home is one of the largest and most trusted homebuilders in the United States. We operate in 47 markets, have built over 680,000 quality homes in our more than 65-year history, and are honored to be the #1 customer-ranked national homebuilder based on third-party buyer surveys. What sets KB Home apart is building strong, personal relationships with every customer and creating an exceptional homebuying experience that offers our homebuyers the ability to personalize their home based on what they value at a price they can afford. As the industry leader in sustainability, KB Home has achieved one of the highest residential energy-efficiency ratings and delivered more ENERGY STAR® certified homes than any other builder, helping to lower the total cost of homeownership. For more information, visit kbhome.com.

Forward-Looking and Cautionary Statements

Certain matters discussed in this press release, including any statements that are predictive in nature or concern future market and economic conditions, business and prospects, our future financial and operational performance, or our future actions and their expected results are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations and projections about future events and are not guarantees of future performance. We do not have a specific policy or intent of updating or revising forward-looking statements. If we update or revise any such statement(s), no assumption should be made that we will further update or revise that statement(s) or update or revise any other such statement(s). Actual events and results may differ materially from those expressed or forecasted in forward-looking statements due to a number of factors. The most important risk factors that could cause our actual performance and future events and actions to differ materially from such forward-looking statements include, but are not limited to the following: general economic, employment and business conditions; population growth, household formations and demographic trends; conditions in the capital, credit and financial markets; our ability to access external financing sources and raise capital through the issuance of common stock, debt or other securities, and/or project financing, on favorable terms; the execution of any securities repurchases pursuant to our board of directors’ authorization; material and trade costs and availability, including the greater costs associated with achieving current and expected higher standards for ENERGY STAR certified homes, and delays related to state and municipal construction, permitting, inspection and utility processes, which have been disrupted by key equipment shortages; consumer and producer price inflation; changes in interest rates, including those set by the Federal Reserve, which the Federal Reserve has increased sharply over the past two years and may further increase to moderate inflation, and those available in the capital markets or from financial institutions and other lenders, and applicable to mortgage loans; our debt level, including our ratio of debt to capital, and our ability to adjust our debt level and maturity schedule; our compliance with the terms of our revolving credit facility and our senior unsecured term loan; the ability and willingness of the applicable lenders and financial institutions, or any substitute or additional lenders and financial institutions, to meet their commitments or fund borrowings, extend credit or provide payment guarantees to or for us under our revolving credit facility or unsecured letter of credit facility; volatility in the market price of our common stock; home selling prices, including our homes’ selling prices, being unaffordable relative to consumer incomes; weak or declining consumer confidence, either generally or specifically with respect to purchasing homes; competition from other sellers of new and resale homes; weather events, significant natural disasters and other climate and environmental factors, such as a lack of adequate water supply to permit new home communities in certain areas; any failure of lawmakers to agree on a budget or appropriation legislation to fund the federal government’s operations (also known as a government shutdown), and financial markets’ and businesses’ reactions to any such failure; government actions, policies, programs and regulations directed at or affecting the housing market (including the tax benefits associated with purchasing and owning a home, and the standards, fees and size limits applicable to the purchase or insuring of mortgage loans by government-sponsored enterprises and government agencies), the homebuilding industry, or construction activities; changes in existing tax laws or enacted corporate income tax rates, including those resulting from regulatory guidance and interpretations issued with respect thereto, such as Internal Revenue Service guidance regarding heightened qualification requirements for federal tax credits for building energy-efficient homes; changes in U.S. trade policies, including the imposition of tariffs and duties on homebuilding materials and products, and related trade disputes with and retaliatory measures taken by other countries; disruptions in world and regional trade flows, economic activity and supply chains due to the military conflict and other attacks in the Middle East region and military conflict in Ukraine, including those stemming from wide-ranging sanctions the U.S. and other countries have imposed or may further impose on Russian business sectors, financial organizations, individuals and raw materials, the impact of which may, among other things, increase our operational costs, exacerbate building materials and appliance shortages and/or reduce our revenues and earnings; the adoption of new or amended financial accounting standards and the guidance and/or interpretations with respect thereto; the availability and cost of land in desirable areas and our ability to timely and efficiently develop acquired land parcels and open new home communities; impairment, land option contract abandonment or other inventory-related charges, including any stemming from decreases in the value of our land assets; our warranty claims experience with respect to homes previously delivered and actual warranty costs incurred; costs and/or charges arising from regulatory compliance requirements, including the costs to implement recent federal and state climate-related disclosure rules, or from legal, arbitral or regulatory proceedings, investigations, claims or settlements, including unfavorable outcomes in any such matters resulting in actual or potential monetary damage awards, penalties, fines or other direct or indirect payments, or injunctions, consent decrees or other voluntary or involuntary restrictions or adjustments to our business operations or practices that are beyond our current expectations and/or accruals; our ability to use/realize the net deferred tax assets we have generated; our ability to successfully implement our current and planned strategies and initiatives related to our product, geographic and market positioning, gaining share and scale in our served markets, through, among other things, our making substantial investments in land and land development, which, in some cases, involves putting significant capital over several years into large projects in one location, and in entering into new markets; our operational and investment concentration in markets in California; consumer interest in our new home communities and products, particularly from first-time homebuyers and higher-income consumers; our ability to generate orders and convert our backlog of orders to home deliveries and revenues, particularly in key markets in California; our ability to successfully implement our business strategies and achieve any associated financial and operational targets and objectives, including those discussed in this release or in any of our other public filings, presentations or disclosures; income tax expense volatility associated with stock-based compensation; the ability of our homebuyers to obtain homeowners and flood insurance policies, and/or typical or lender-required policies for other hazards or events, for their homes, which may depend on the ability and willingness of insurers or government-funded or -sponsored programs to offer coverage at an affordable price or at all; the ability of our homebuyers to obtain residential mortgage loans and mortgage banking services, which may depend on the ability and willingness of lenders and financial institutions to offer such loans and services to our homebuyers; the performance of mortgage lenders to our homebuyers; the performance of KBHS Home Loans, LLC (“KBHS”); the ability and willingness of lenders and financial institutions to extend credit facilities to KBHS to fund its originated mortgage loans; information technology failures and data security breaches; an epidemic, pandemic or significant seasonal or other disease outbreak, and the control response measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it, which may precipitate or exacerbate one or more of the above-mentioned and/or other risks, and significantly disrupt or prevent us from operating our business in the ordinary course for an extended period; widespread protests and/or civil unrest, whether due to political events, social movements or other reasons; and other events outside of our control. Please see our periodic reports and other filings with the Securities and Exchange Commission for a further discussion of these and other risks and uncertainties applicable to our business.

KB HOME

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months and Nine Months Ended August 31, 2024 and 2023

(In Thousands, Except Per Share Amounts – Unaudited)

 

 

Three Months Ended August 31,

 

Nine Months Ended August 31,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Total revenues

$

1,752,608

 

 

$

1,587,011

 

 

$

4,930,187

 

 

$

4,736,641

 

Homebuilding:

 

 

 

 

 

 

 

Revenues

$

1,745,979

 

 

$

1,579,719

 

 

$

4,909,189

 

 

$

4,716,102

 

Costs and expenses

 

(1,557,029

)

 

 

(1,400,477

)

 

 

(4,374,380

)

 

 

(4,178,269

)

Operating income

 

188,950

 

 

 

179,242

 

 

 

534,809

 

 

 

537,833

 

Interest income and other

 

4,073

 

 

 

5,492

 

 

 

29,379

 

 

 

7,688

 

Equity in income (loss) of unconsolidated joint ventures

 

3,453

 

 

 

(112

)

 

 

3,232

 

 

 

(1,182

)

Homebuilding pretax income

 

196,476

 

 

 

184,622

 

 

 

567,420

 

 

 

544,339

 

Financial services:

 

 

 

 

 

 

 

Revenues

 

6,629

 

 

 

7,292

 

 

 

20,998

 

 

 

20,539

 

Expenses

 

(1,608

)

 

 

(1,530

)

 

 

(4,627

)

 

 

(4,360

)

Equity in income of unconsolidated joint venture

 

5,932

 

 

 

4,149

 

 

 

19,422

 

 

 

11,157

 

Financial services pretax income

 

10,953

 

 

 

9,911

 

 

 

35,793

 

 

 

27,336

 

Total pretax income

 

207,429

 

 

 

194,533

 

 

 

603,213

 

 

 

571,675

 

Income tax expense

 

(50,100

)

 

 

(44,600

)

 

 

(138,800

)

 

 

(131,800

)

Net income

$

157,329

 

 

$

149,933

 

 

$

464,413

 

 

$

439,875

 

Earnings per share:

 

 

 

 

 

 

 

Basic

$

2.10

 

 

$

1.86

 

 

$

6.12

 

 

$

5.34

 

Diluted

$

2.04

 

 

$

1.80

 

 

$

5.94

 

 

$

5.18

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

74,476

 

 

 

80,175

 

 

 

75,339

 

 

 

81,790

 

Diluted

 

76,630

 

 

 

82,732

 

 

 

77,565

 

 

 

84,332

 

KB HOME

CONSOLIDATED BALANCE SHEETS

(In Thousands – Unaudited)

 

 

August 31, 2024

 

November 30, 2023

Assets

 

 

 

Homebuilding:

 

 

 

Cash and cash equivalents

$

374,911

 

$

727,076

Receivables

 

373,536

 

 

 

366,862

 

Inventories

 

5,648,930

 

 

 

5,133,646

 

Investments in unconsolidated joint ventures

 

62,984

 

 

 

59,128

 

Property and equipment, net

 

89,290

 

 

 

88,309

 

Deferred tax assets, net

 

113,775

 

 

 

119,475

 

Other assets

 

113,675

 

 

 

96,987

 

 

 

6,777,101

 

 

 

6,591,483

 

Financial services

 

62,779

 

 

 

56,879

 

Total assets

$

6,839,880

 

 

$

6,648,362

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

Homebuilding:

 

 

 

Accounts payable

$

401,768

 

 

$

388,452

 

Accrued expenses and other liabilities

 

757,928

 

 

 

758,227

 

Notes payable

 

1,691,060

 

 

 

1,689,898

 

 

 

2,850,756

 

 

 

2,836,577

 

Financial services

 

2,030

 

 

 

1,645

 

Stockholders’ equity

 

3,987,094

 

 

 

3,810,140

 

Total liabilities and stockholders’ equity

$

6,839,880

 

 

$

6,648,362

 

KB HOME

SUPPLEMENTAL INFORMATION

For the Three Months and Nine Months Ended August 31, 2024 and 2023

(In Thousands, Except Average Selling Price – Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended August 31,

 

Nine Months Ended August 31,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Homebuilding revenues:

 

 

 

 

 

 

 

Housing

$

1,745,979

 

 

$

1,573,684

 

 

$

4,905,617

 

 

$

4,710,067

 

Land

 

—

 

 

 

6,035

 

 

 

3,572

 

 

 

6,035

 

Total

$

1,745,979

 

 

$

1,579,719

 

 

$

4,909,189

 

 

$

4,716,102

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Homebuilding costs and expenses:

 

 

 

 

 

 

 

Construction and land costs

 

 

 

 

 

 

 

Housing

$

1,385,563

 

 

$

1,235,469

 

 

$

3,872,092

 

 

$

3,704,848

 

Land

 

—

 

 

 

4,911

 

 

 

2,101

 

 

 

4,911

 

Subtotal

 

1,385,563

 

 

 

1,240,380

 

 

 

3,874,193

 

 

 

3,709,759

 

Selling, general and administrative expenses

 

171,466

 

 

 

160,097

 

 

 

500,187

 

 

 

468,510

 

Total

$

1,557,029

 

 

$

1,400,477

 

 

$

4,374,380

 

 

$

4,178,269

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

Interest incurred

$

26,583

 

 

$

26,810

 

 

$

79,665

 

 

$

80,609

 

Interest capitalized

 

(26,583

)

 

 

(26,810

)

 

 

(79,665

)

 

 

(80,609

)

Total

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other information:

 

 

 

 

 

 

 

Amortization of previously capitalized interest

$

28,180

 

 

$

29,305

 

 

$

83,872

 

 

$

87,373

 

Depreciation and amortization

 

10,289

 

 

 

10,078

 

 

 

30,861

 

 

 

29,511

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average selling price:

 

 

 

 

 

 

 

West Coast

$

661,400

 

 

$

692,400

 

 

$

667,600

 

 

$

694,500

 

Southwest

 

459,300

 

 

 

418,800

 

 

 

452,400

 

 

 

431,100

 

Central

 

347,500

 

 

 

402,700

 

 

 

358,800

 

 

 

412,500

 

Southeast

 

412,200

 

 

 

389,200

 

 

 

415,600

 

 

 

394,100

 

Total

$

480,900

 

 

$

466,300

 

 

$

481,400

 

 

$

479,200

 

KB HOME

SUPPLEMENTAL INFORMATION

For the Three Months and Nine Months Ended August 31, 2024 and 2023

(Dollars in Thousands – Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended August 31,

 

Nine Months Ended August 31,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Homes delivered:

 

 

 

 

 

 

 

West Coast

 

1,150

 

 

732

 

 

3,021

 

 

2,320

Southwest

 

681

 

 

 

717

 

 

 

2,110

 

 

 

2,031

 

Central

 

1,073

 

 

 

1,258

 

 

 

2,971

 

 

 

3,495

 

Southeast

 

727

 

 

 

668

 

 

 

2,089

 

 

 

1,983

 

Total

 

3,631

 

 

 

3,375

 

 

 

10,191

 

 

 

9,829

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net orders:

 

 

 

 

 

 

 

West Coast

 

958

 

 

 

906

 

 

 

3,134

 

 

 

3,062

 

Southwest

 

616

 

 

 

656

 

 

 

2,099

 

 

 

1,915

 

Central

 

871

 

 

 

865

 

 

 

3,188

 

 

 

2,318

 

Southeast

 

640

 

 

 

670

 

 

 

1,984

 

 

 

1,880

 

Total

 

3,085

 

 

 

3,097

 

 

 

10,405

 

 

 

9,175

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net order value:

 

 

 

 

 

 

 

West Coast

$

678,783

 

 

$

638,643

 

 

$

2,214,666

 

 

$

2,044,331

 

Southwest

 

290,229

 

 

 

296,811

 

 

 

967,880

 

 

 

819,543

 

Central

 

313,108

 

 

 

296,255

 

 

 

1,162,855

 

 

 

800,936

 

Southeast

 

261,028

 

 

 

280,671

 

 

 

811,841

 

 

 

749,087

 

Total

$

1,543,148

 

 

$

1,512,380

 

 

$

5,157,242

 

 

$

4,413,897

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

August 31, 2024

 

August 31, 2023

 

Homes

 

Value

 

Homes

 

Value

Backlog data:

 

 

 

 

 

 

 

West Coast

 

1,658

 

 

$

1,223,121

 

 

 

2,029

 

 

$

1,356,175

 

Southwest

 

1,368

 

 

 

629,995

 

 

 

1,576

 

 

 

692,175

 

Central

 

1,484

 

 

 

555,474

 

 

 

1,812

 

 

 

678,994

 

Southeast

 

1,214

 

 

 

510,714

 

 

 

1,591

 

 

 

668,045

 

Total

 

5,724

 

 

$

2,919,304

 

 

 

7,008

 

 

$

3,395,389

 

KB HOME RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (In Thousands, Except Percentages – Unaudited)

This press release contains, and Company management’s discussion of the results presented in this press release may include, information about the Company’s adjusted housing gross profit margin, 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 August 31,

 

Nine Months Ended August 31,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Housing revenues

$

1,745,979

 

 

$

1,573,684

 

 

$

4,905,617

 

 

$

4,710,067

 

Housing construction and land costs

 

(1,385,563

)

 

 

(1,235,469

)

 

 

(3,872,092

)

 

 

(3,704,848

)

Housing gross profits

 

360,416

 

 

 

338,215

 

 

 

1,033,525

 

 

 

1,005,219

 

Add: Inventory-related charges (a)

 

1,177

 

 

 

631

 

 

 

3,685

 

 

 

10,207

 

Adjusted housing gross profits

$

361,593

 

 

$

338,846

 

 

$

1,037,210

 

 

$

1,015,426

 

Housing gross profit margin

 

20.6

%

 

 

21.5

%

 

 

21.1

%

 

 

21.3

%

Adjusted housing gross profit margin

 

20.7

%

 

 

21.5

%

 

 

21.1

%

 

 

21.6

%

 

(a) Represents inventory impairment and land option contract abandonment charges associated with housing operations.

Adjusted housing gross profit margin is a non-GAAP financial measure, which the Company calculates by dividing housing revenues less housing construction and land costs excluding housing inventory impairment and land option contract abandonment charges (as applicable) recorded during a given period, by housing revenues. The most directly comparable GAAP financial measure is housing gross profit margin. The Company believes adjusted housing gross profit margin is a relevant and useful financial measure to investors in evaluating the Company’s performance as it measures the gross profits the Company generated specifically on the homes delivered during a given period. This non-GAAP financial measure isolates the impact that housing inventory impairment and land option contract abandonment charges have on housing gross profit margins, and allows investors to make comparisons with the Company’s competitors that adjust housing gross profit margins in a similar manner. The Company also believes investors will find adjusted housing gross profit margin relevant and useful because it represents a profitability measure that may be compared to a prior period without regard to variability of housing inventory impairment and land option contract abandonment charges. This financial measure assists management in making strategic decisions regarding community location and product mix, product pricing and construction pace.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240924731601/en/

Jill Peters, Investor Relations Contact (310) 893-7456 or jpeters@kbhome.com Cara Kane, Media Contact (321) 299-6844 or ckane@kbhome.com