Diluted Earnings Per Share Rises 83% to
Net Orders Increase 16% to 2,508; Net Order Value Up 20% to
"We are very pleased with our third quarter results, as we continued our
trajectory of solid earnings performance for the year," said
"Housing market conditions remain healthy, with positive employment, higher household income and economic trends supporting steady consumer demand amid constrained supply," said Mezger. "In this environment, we believe we have the strategies in place to strengthen and leverage our growth platform to expand our business and increase market share across our current geographic footprint."
Three Months Ended
Nine Months Ended
Backlog and
Balance Sheet (as of
Earnings Conference Call
The conference call to discuss the Company's third quarter 2016 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;
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
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CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
For the Nine Months and Three Months Ended |
||||||||||||||||
(In Thousands, Except Per Share Amounts — Unaudited) |
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Nine Months Ended |
Three Months Ended |
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2016 | 2015 | 2016 | 2015 | |||||||||||||
Total revenues | $ | 2,402,704 | $ | 2,046,247 | $ | 913,283 | $ | 843,157 | ||||||||
Homebuilding: | ||||||||||||||||
Revenues | $ | 2,394,315 | $ | 2,038,896 | $ | 910,111 | $ | 840,204 | ||||||||
Costs and expenses | (2,297,908 | ) | (1,970,654 | ) | (858,634 | ) | (804,222 | ) | ||||||||
Operating income | 96,407 | 68,242 | 51,477 | 35,982 | ||||||||||||
Interest income | 395 | 342 | 109 | 87 | ||||||||||||
Interest expense | (5,667 | ) | (17,850 | ) | — | (4,394 | ) | |||||||||
Equity in loss of unconsolidated joint ventures | (1,964 | ) | (1,180 | ) | (536 | ) | (422 | ) | ||||||||
Homebuilding pretax income | 89,171 | 49,554 | 51,050 | 31,253 | ||||||||||||
Financial services: | ||||||||||||||||
Revenues | 8,389 | 7,351 | 3,172 | 2,953 | ||||||||||||
Expenses | (2,621 | ) | (2,802 | ) | (891 | ) | (910 | ) | ||||||||
Equity in income (loss) of unconsolidated joint ventures | (652 | ) | 3,023 | 132 | 658 | |||||||||||
Financial services pretax income | 5,116 | 7,572 | 2,413 | 2,701 | ||||||||||||
Total pretax income | 94,287 | 57,126 | 53,463 | 33,954 | ||||||||||||
Income tax expense | (26,200 | ) | (16,500 | ) | (14,100 | ) | (10,700 | ) | ||||||||
Net income | $ | 68,087 | $ | 40,626 | $ | 39,363 | $ | 23,254 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | .79 | $ | .44 | $ | .46 | $ | .25 | ||||||||
Diluted | $ | .72 | $ | .42 | $ | .42 | $ | .23 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 85,952 | 92,005 | 84,457 | 92,065 | ||||||||||||
Diluted | 96,437 | 101,605 | 95,203 | 101,874 | ||||||||||||
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CONSOLIDATED BALANCE SHEETS | |||||||
(In Thousands — Unaudited) |
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2016 |
2015 |
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Assets | |||||||
Homebuilding: | |||||||
Cash and cash equivalents | $ | 334,669 | $ | 559,042 | |||
Restricted cash | 602 | 9,344 | |||||
Receivables | 149,219 | 152,682 | |||||
Inventories | 3,597,673 | 3,313,747 | |||||
Investments in unconsolidated joint ventures | 61,526 | 71,558 | |||||
Deferred tax assets, net | 756,596 | 782,196 | |||||
Other assets | 113,341 | 112,774 | |||||
5,013,626 | 5,001,343 | ||||||
Financial services | 14,135 | 14,028 | |||||
Total assets | $ | 5,027,761 | $ | 5,015,371 | |||
Liabilities and stockholders' equity | |||||||
Homebuilding: | |||||||
Accounts payable | $ | 195,785 | $ | 183,770 | |||
Accrued expenses and other liabilities | 471,295 | 513,414 | |||||
Notes payable | 2,674,795 | 2,625,536 | |||||
3,341,875 | 3,322,720 | ||||||
Financial services | 3,436 | 1,817 | |||||
Stockholders' equity | 1,682,450 | 1,690,834 | |||||
Total liabilities and stockholders' equity | $ | 5,027,761 | $ | 5,015,371 | |||
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SUPPLEMENTAL INFORMATION | ||||||||||||||||
For the Nine Months and Three Months Ended |
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(In Thousands, Except Average Selling Price — Unaudited) |
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Nine Months Ended |
Three Months Ended |
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2016 | 2015 | 2016 | 2015 | |||||||||||||
Homebuilding revenues: | ||||||||||||||||
Housing | $ | 2,390,165 | $ | 1,928,395 | $ | 910,111 | $ | 798,633 | ||||||||
Land | 4,150 | 110,501 | — | 41,571 | ||||||||||||
Total | $ | 2,394,315 | $ | 2,038,896 | $ | 910,111 | $ | 840,204 | ||||||||
Homebuilding costs and expenses: | ||||||||||||||||
Construction and land costs | ||||||||||||||||
Housing | $ | 2,007,621 | $ | 1,622,530 | $ | 760,490 | $ | 668,871 | ||||||||
Land | 10,401 | 103,446 | — | 40,277 | ||||||||||||
Subtotal | 2,018,022 | 1,725,976 | 760,490 | 709,148 | ||||||||||||
Selling, general and administrative expenses | 279,886 | 244,678 | 98,144 | 95,074 | ||||||||||||
Total | $ | 2,297,908 | $ | 1,970,654 | $ | 858,634 | $ | 804,222 | ||||||||
Interest expense: | ||||||||||||||||
Interest incurred | $ | 138,994 | $ | 140,789 | $ | 46,485 | $ | 46,587 | ||||||||
Interest capitalized | (133,327 | ) | (122,939 | ) | (46,485 | ) | (42,193 | ) | ||||||||
Total | $ | 5,667 | $ | 17,850 | $ | — | $ | 4,394 | ||||||||
Other information: | ||||||||||||||||
Depreciation and amortization | $ | 8,431 | $ | 8,413 | $ | 2,829 | $ | 2,853 | ||||||||
Amortization of previously capitalized interest | 106,663 | 99,488 | 40,424 | 51,752 | ||||||||||||
Average selling price: | ||||||||||||||||
|
$ | 572,100 | $ | 571,500 | $ | 583,300 | $ | 579,800 | ||||||||
Southwest | 286,400 | 279,500 | 287,800 | 285,200 | ||||||||||||
Central | 265,900 | 244,600 | 272,100 | 256,000 | ||||||||||||
Southeast | 279,700 | 278,100 | 287,600 | 287,300 | ||||||||||||
Total | $ | 353,100 | $ | 343,400 | $ | 365,900 | $ | 357,200 | ||||||||
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SUPPLEMENTAL INFORMATION | |||||||||||||||
For the Nine Months and Three Months Ended |
|||||||||||||||
(Dollars in Thousands — Unaudited) |
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Nine Months Ended |
Three Months Ended |
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2016 | 2015 | 2016 | 2015 | ||||||||||||
Homes delivered: | |||||||||||||||
|
1,799 | 1,498 | 710 | 625 | |||||||||||
Southwest | 1,111 | 888 | 369 | 372 | |||||||||||
Central | 2,647 | 2,212 | 976 | 822 | |||||||||||
Southeast | 1,212 | 1,018 | 432 | 417 | |||||||||||
Total | 6,769 | 5,616 | 2,487 | 2,236 | |||||||||||
Net orders: | |||||||||||||||
|
2,325 | 1,886 | 775 | 564 | |||||||||||
Southwest | 1,337 | 1,305 | 437 | 384 | |||||||||||
Central | 3,042 | 2,864 | 931 | 818 | |||||||||||
Southeast | 1,325 | 1,316 | 365 | 401 | |||||||||||
Total | 8,029 | 7,371 | 2,508 | 2,167 | |||||||||||
Net order value: | |||||||||||||||
|
$ | 1,346,091 | $ | 1,088,175 | $ | 435,598 | $ | 331,864 | |||||||
Southwest | 385,501 | 368,394 | 122,876 | 110,181 | |||||||||||
Central | 845,164 | 758,592 | 263,707 | 223,168 | |||||||||||
Southeast | 380,509 | 364,169 | 107,408 | 108,075 | |||||||||||
Total | $ | 2,957,265 | $ | 2,579,330 | $ | 929,589 | $ | 773,288 | |||||||
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Backlog Value |
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Backlog Value | ||||||||||||
Backlog data: | |||||||||||||||
|
1,264 | $ | 724,795 | 981 | $ | 586,862 | |||||||||
Southwest | 831 | 234,736 | 741 | 204,802 | |||||||||||
Central | 2,237 | 636,234 | 2,141 | 571,433 | |||||||||||
Southeast | 894 | 252,815 | 801 | 222,381 | |||||||||||
Total | 5,226 | $ | 1,848,580 | 4,664 | $ | 1,585,478 | |||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
For
the Nine Months and Three Months Ended
(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:
Nine Months Ended |
Three Months Ended |
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2016 | 2015 | 2016 | 2015 | |||||||||||||
Housing revenues | $ | 2,390,165 | $ | 1,928,395 | $ | 910,111 | $ | 798,633 | ||||||||
Housing construction and land costs | (2,007,621 | ) | (1,622,530 | ) | (760,490 | ) | (668,871 | ) | ||||||||
Housing gross profits | 382,544 | 305,865 | 149,621 | 129,762 | ||||||||||||
Add: Amortization of previously capitalized interest (a) | 106,181 | 83,050 | 40,424 | 35,314 | ||||||||||||
Inventory-related charges (b) | 10,615 | 4,516 | 3,052 | 3,532 | ||||||||||||
Adjusted housing gross profits | $ | 499,340 | $ | 393,431 | $ | 193,097 | $ | 168,608 | ||||||||
Housing gross profit margin as a percentage of housing revenues | 16.0 | % | 15.9 | % | 16.4 | % | 16.2 | % | ||||||||
Adjusted housing gross profit margin as a percentage of housing revenues | 20.9 | % | 20.4 | % | 21.2 | % | 21.1 | % |
(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.
RECONCILIATION 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:
2016 |
2015 |
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Notes payable | $ | 2,674,795 | $ | 2,625,536 | ||||
Stockholders' equity | 1,682,450 | 1,690,834 | ||||||
Total capital | $ | 4,357,245 | $ | 4,316,370 | ||||
Ratio of debt to capital | 61.4 | % | 60.8 | % | ||||
Notes payable | $ | 2,674,795 | $ | 2,625,536 | ||||
Less: Cash and cash equivalents and restricted cash | (335,271 | ) | (568,386 | ) | ||||
Net debt | 2,339,524 | 2,057,150 | ||||||
Stockholders' equity | 1,682,450 | 1,690,834 | ||||||
Total capital | $ | 4,021,974 | $ | 3,747,984 | ||||
Ratio of net debt to capital | 58.2 | % | 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.
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