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Fourth Quarter Revenues Increase 29% to
Net Income of
Net Order Value Up 22% to
Three Months Ended
Twelve Months Ended
Backlog and Net Orders
Balance Sheet
Management Comments
"The commitment and focus of our team throughout 2014 produced
significant improvements in our financial and operational results," said
"Through execution on our core strategic initiatives, we also achieved our community count growth objective, ending the fourth quarter with 227 communities, a 19% increase from last year," continued Mezger. "Our higher community count helped us generate double-digit year-over-year growth in net orders, a 22% increase in net order value, and a 34% rise in our ending backlog value for the quarter. Looking forward, we believe that our higher backlog and expanded community footprint have positioned us for further success in the coming year."
"We are energized by our achievements in 2014 and the opportunities ahead," said Mezger. "To build on our progress, in 2015 we will focus on key initiatives to extend our profitable growth trajectory and enhance our capital efficiency. These initiatives will emphasize generating cash from our operations, expanding our community count, gaining share in our served markets, increasing our operating income margin and improving our return on invested capital, with the aim of driving enhanced long-term performance and value for our stockholders."
Earnings Conference Call
The conference call on the fourth quarter 2014 earnings will be
broadcast live TODAY at
About
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; adverse
market conditions, including an increased supply of unsold homes,
declining home prices and greater foreclosure and short sale activity,
among other things, that could negatively affect our consolidated
financial statements, including due to additional impairment or land
option contract abandonment charges, lower revenues and operating and
other losses; conditions in the capital, credit and financial markets
(including residential consumer mortgage lending standards, the
availability of residential consumer mortgage financing and mortgage
foreclosure rates); material prices and availability; labor costs and
availability; changes in interest rates; inflation; our debt level,
including our ratio of debt to total capital, and our ability to adjust
our debt level, maturity schedule and structure and to access the
equity, credit, capital or other financial markets or other external
financing sources, including raising capital through the public or
private issuance of common stock, debt or other securities, and/or
project financing, on favorable terms; our compliance with the terms and
covenants of our revolving credit facility; weak or declining consumer
confidence, either generally or specifically with respect to purchasing
homes; competition for home sales from other sellers of new and resale
homes, including lenders and other sellers of homes obtained through
foreclosures or short sales; weather conditions, significant natural
disasters and other environmental factors; government actions, policies,
programs and regulations directed at or affecting the housing market
(including the Dodd-Frank Act, tax credits, tax incentives and/or
subsidies for home purchases, tax deductions for residential consumer
mortgage interest payments and property taxes, tax exemptions for
profits on home sales, programs intended to modify existing mortgage
loans and to prevent mortgage foreclosures 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; decisions regarding
federal fiscal and monetary policies, including those relating to
taxation, government spending, interest rates and economic stimulus
measures; the availability and cost of land in desirable areas; our
warranty claims experience with respect to homes previously delivered
and actual warranty costs incurred, including our warranty claims and
costs experience at certain of our communities in
|
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| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
|
For the Twelve Months and Three Months Ended |
|||||||||||||||||
|
(In Thousands, Except Per Share Amounts) |
|||||||||||||||||
|
Twelve Months |
Three Months | ||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||||||
| Total revenues | $ | 2,400,949 | $ | 2,097,130 | $ | 796,041 | $ | 618,531 | |||||||||
| Homebuilding: | |||||||||||||||||
| Revenues | $ | 2,389,643 | $ | 2,084,978 | $ | 792,749 | $ | 614,574 | |||||||||
| Costs and expenses | (2,273,674 | ) | (1,992,894 | ) | (762,701 | ) | (567,598 | ) | |||||||||
| Operating income | 115,969 | 92,084 | 30,048 | 46,976 | |||||||||||||
| Interest income | 443 | 792 | 50 | 163 | |||||||||||||
| Interest expense | (30,750 | ) | (62,690 | ) | (4,461 | ) | (21,617 | ) | |||||||||
| Equity in income (loss) of unconsolidated joint ventures | 741 | (2,007 | ) | (420 | ) | (349 | ) | ||||||||||
| Homebuilding pretax income | 86,403 | 28,179 | 25,217 | 25,173 | |||||||||||||
| Financial services: | |||||||||||||||||
| Revenues | 11,306 | 12,152 | 3,292 | 3,957 | |||||||||||||
| Expenses | (3,446 | ) | (3,042 | ) | (883 | ) | (807 | ) | |||||||||
| Equity in income (loss) of unconsolidated joint ventures | 686 | 1,074 | 975 | (7 | ) | ||||||||||||
| Financial services pretax income | 8,546 | 10,184 | 3,384 | 3,143 | |||||||||||||
| Total pretax income | 94,949 | 38,363 | 28,601 | 28,316 | |||||||||||||
| Income tax benefit (expense) | 823,400 | 1,600 | 824,200 | (200 | ) | ||||||||||||
| Net income | $ | 918,349 | $ | 39,963 | $ | 852,801 | $ | 28,116 | |||||||||
| Earnings per share: | |||||||||||||||||
| Basic | $ | 10.26 | $ | .48 | $ | 9.25 | $ | .33 | |||||||||
| Diluted | $ | 9.25 | $ | .46 | $ | 8.36 | $ | .31 | |||||||||
| Weighted average shares outstanding: | |||||||||||||||||
| Basic | 89,265 | 82,630 | 91,902 | 83,742 | |||||||||||||
| Diluted | 99,314 | 91,559 | 101,831 | 93,784 | |||||||||||||
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||||||
| CONSOLIDATED BALANCE SHEETS | ||||||
|
(In Thousands) |
||||||
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|
|
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| 2014 | 2013 | |||||
| Assets | ||||||
| Homebuilding: | ||||||
| Cash and cash equivalents | $ | 356,366 | $ | 530,095 | ||
| Restricted cash | 27,235 | 41,906 | ||||
| Receivables | 125,488 | 75,749 | ||||
| Inventories | 3,218,387 | 2,298,577 | ||||
| Investments in unconsolidated joint ventures | 79,441 | 130,192 | ||||
| Deferred tax assets, net | 825,232 | — | ||||
| Other assets | 114,915 | 107,076 | ||||
| 4,747,064 | 3,183,595 | |||||
| Financial services | 10,486 | 10,040 | ||||
| Total assets | $ | 4,757,550 | $ | 3,193,635 | ||
| Liabilities and stockholders' equity | ||||||
| Homebuilding: | ||||||
| Accounts payable | $ | 172,716 | $ | 148,282 | ||
| Accrued expenses and other liabilities | 409,882 | 356,176 | ||||
| Notes payable | 2,576,525 | 2,150,498 | ||||
| 3,159,123 | 2,654,956 | |||||
| Financial services | 2,517 | 2,593 | ||||
| Stockholders' equity | 1,595,910 | 536,086 | ||||
| Total liabilities and stockholders' equity | $ | 4,757,550 | $ | 3,193,635 | ||
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| SUPPLEMENTAL INFORMATION | ||||||||||||||||
|
For the Twelve Months and Three Months Ended |
||||||||||||||||
|
(In Thousands, Except Average Selling Price) |
||||||||||||||||
| Twelve Months | Three Months | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Homebuilding revenues: | ||||||||||||||||
| Housing | $ | 2,369,633 | $ | 2,084,103 | $ | 783,460 | $ | 613,699 | ||||||||
| Land | 20,010 | 875 | 9,289 | 875 | ||||||||||||
| Total | $ | 2,389,643 | $ | 2,084,978 | $ | 792,749 | $ | 614,574 | ||||||||
| Twelve Months | Three Months | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Homebuilding costs and expenses: | ||||||||||||||||
| Construction and land costs | ||||||||||||||||
| Housing | $ | 1,940,100 | $ | 1,736,320 | $ | 647,876 | $ | 503,676 | ||||||||
| Land | 45,551 | 766 | 32,517 | 766 | ||||||||||||
| Subtotal | 1,985,651 | 1,737,086 | 680,393 | 504,442 | ||||||||||||
| Selling, general and administrative expenses | 288,023 | 255,808 | 82,308 | 63,156 | ||||||||||||
| Total | $ | 2,273,674 | $ | 1,992,894 | $ | 762,701 | $ | 567,598 | ||||||||
| Twelve Months | Three Months | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Interest expense: | ||||||||||||||||
| Interest incurred | $ | 171,541 | $ | 138,653 | $ | 44,500 | $ | 36,397 | ||||||||
| Loss on early extinguishment of debt | — | 10,448 | — | 10,448 | ||||||||||||
| Interest capitalized | (140,791 | ) | (86,411 | ) | (40,039 | ) | (25,228 | ) | ||||||||
| Total | $ | 30,750 | $ | 62,690 | $ | 4,461 | $ | 21,617 | ||||||||
| Twelve Months | Three Months | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Other information: | ||||||||||||||||
| Depreciation and amortization | $ | 9,544 | $ | 7,204 | $ | 2,621 | $ | 1,988 | ||||||||
| Amortization of previously capitalized interest | 90,804 | 87,414 | 31,333 | 24,471 | ||||||||||||
| Twelve Months | Three Months | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Average selling price: | ||||||||||||||||
|
|
$ | 569,700 | $ | 467,800 | $ | 611,700 | $ | 524,200 | ||||||||
| Southwest | 271,100 | 237,500 | 255,400 | 252,500 | ||||||||||||
| Central | 223,800 | 198,900 | 234,500 | 209,800 | ||||||||||||
| Southeast | 263,600 | 233,900 | 279,300 | 241,200 | ||||||||||||
| Total | $ | 328,400 | $ | 291,700 | $ | 351,500 | $ | 301,100 | ||||||||
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| SUPPLEMENTAL INFORMATION | |||||||||||||
|
For the Twelve Months and Three Months Ended |
|||||||||||||
|
(Dollars in Thousands) |
|||||||||||||
| Twelve Months | Three Months | ||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||
| Homes delivered: | |||||||||||||
|
|
1,913 | 2,179 | 625 | 521 | |||||||||
| Southwest | 736 | 738 | 215 | 193 | |||||||||
| Central | 3,098 | 2,841 | 931 | 876 | |||||||||
| Southeast | 1,468 | 1,387 | 458 | 448 | |||||||||
| Total | 7,215 | 7,145 | 2,229 | 2,038 | |||||||||
| Twelve Months | Three Months | ||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||
| Net orders: | |||||||||||||
|
|
2,086 | 1,915 | 468 | 371 | |||||||||
| Southwest | 872 | 756 | 282 | 188 | |||||||||
| Central | 3,239 | 3,027 | 652 | 663 | |||||||||
| Southeast | 1,370 | 1,427 | 304 | 334 | |||||||||
| Total | 7,567 | 7,125 | 1,706 | 1,556 | |||||||||
| Twelve Months | Three Months | ||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||
| Net order value: | |||||||||||||
|
|
$ | 1,217,590 | $ | 976,118 | $ | 267,796 | $ | 194,888 | |||||
| Southwest | 230,632 | 191,085 | 75,040 | 53,248 | |||||||||
| Central | 755,684 | 636,934 | 157,673 | 144,255 | |||||||||
| Southeast | 376,045 | 352,928 | 86,866 | 89,311 | |||||||||
| Total | $ | 2,579,951 | $ | 2,157,065 | $ | 587,375 | $ | 481,702 | |||||
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Backlog Value |
|
Backlog Value | ||||||||||
| Backlog data: | |||||||||||||
|
|
593 | $ | 355,651 | 420 | $ | 206,308 | |||||||
| Southwest | 324 | 82,140 | 201 | 50,858 | |||||||||
| Central | 1,489 | 334,007 | 1,335 | 279,424 | |||||||||
| Southeast | 503 | 142,227 | 601 | 145,899 | |||||||||
| Total | 2,909 | $ | 914,025 | 2,557 | $ | 682,489 | |||||||
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| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | |||||||||||||||||
|
For the Twelve Months and Three Months Ended |
|||||||||||||||||
|
(In Thousands, Except Percentages) |
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|
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 thus, should not be considered in isolation or as an alternative to the 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. |
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|
Adjusted Housing Gross Profit Margin |
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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: |
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| Twelve Months | Three Months | ||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||||||
| Housing revenues | $ | 2,369,633 | $ | 2,084,103 | $ | 783,460 | $ | 613,699 | |||||||||
| Housing construction and land costs | (1,940,100 | ) | (1,736,320 | ) | (647,876 | ) | (503,676 | ) | |||||||||
| Housing gross profits | 429,533 | 347,783 | 135,584 | 110,023 | |||||||||||||
| Add: Housing inventory impairment and land option contract abandonment charges | 12,788 | 3,581 | 10,985 | 3,297 | |||||||||||||
| Warranty-related charges | — | 31,959 | — | 8,481 | |||||||||||||
| Adjusted housing gross profits | $ | 442,321 | $ | 383,323 | $ | 146,569 | $ | 121,801 | |||||||||
| Housing gross profit margin as a percentage of housing revenues | 18.1 | % | 16.7 | % | 17.3 | % | 17.9 | % | |||||||||
| Adjusted housing gross profit margin as a percentage of housing revenues | 18.7 | % | 18.4 | % | 18.7 | % | 19.8 | % | |||||||||
|
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 and warranty-related 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 and enhances the comparability between periods. 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 the housing inventory impairment and land option contract abandonment charges and warranty-related charges (as applicable). This financial measure assists management in making strategic decisions regarding product mix, product pricing and construction pace. |
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| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||
|
(In Thousands, Except Percentages) |
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|
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: |
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|
2014 |
2013 |
|||||||
| Notes payable | $ | 2,576,525 | $ | 2,150,498 | ||||
| Stockholders' equity | 1,595,910 | 536,086 | ||||||
| Total capital | $ | 4,172,435 | $ | 2,686,584 | ||||
| Ratio of debt to capital | 61.8 | % | 80.0 | % | ||||
| Notes payable | $ | 2,576,525 | $ | 2,150,498 | ||||
| Less: Cash and cash equivalents and restricted cash | (383,601 | ) | (572,001 | ) | ||||
| Net debt | 2,192,924 | 1,578,497 | ||||||
| Stockholders' equity | 1,595,910 | 536,086 | ||||||
| Total capital | $ | 3,788,834 | $ | 2,114,583 | ||||
| Ratio of net debt to capital | 57.9 | % | 74.6 | % | ||||
|
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. |
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Investor Relations Contact
kmarshall@kbhome.com
or
Media
Contact
smartin@kbhome.com
Source:
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