Revenues Up 24% to $1.0 Billion; Diluted Earnings Per Share Rise 94%
to $.33
Net Order Value Increases 15% to $1.4 Billion;
Backlog Value Grows 19% to $2.2 Billion
LOS ANGELES--(BUSINESS WIRE)--
KB Home (NYSE: KBH) today reported results for its second quarter ended
May 31, 2017.
"Our strong second quarter performance, particularly our 24% revenue
growth, reflects our ongoing efforts to increase the scale of our
business and continue the steady operational execution that are driving
improvements in our profits, returns and other financial metrics," said
Jeffrey Mezger, chairman, president and chief executive officer.
"Specifically, we produced measurable expansion of our operating income
margin which, combined with our backlog growing to $2.2 billion,
positions us for continued meaningful improvement in our results.
Looking forward, we remain committed to delivering value to our
customers and stockholders and, based on the advancements we have made
in the first half of the year, as well as our positive outlook, we are
raising our 2017 full-year financial targets."
"The housing market recovery continues on a steady path, supported by
favorable industry fundamentals," said Mezger. "Recent improvements in
consumer sentiment and employment, combined with relatively low mortgage
interest rates, are signaling further strength in the demand for
housing. At the same time, the supply of available homes in many areas
across the country remains insufficient to satisfy current needs. Given
these dynamics in most of our served markets, and our present backlog
level, we believe we are well positioned for continued growth with our
strong product offerings, compelling customer value proposition and
desirable community locations."
Three Months Ended May 31, 2017 (comparisons on
a year-over-year basis)
-
Total revenues grew 24% to $1.00 billion.
-
Deliveries rose 11% to 2,580 homes, with double-digit increases in
three of the Company's four regions.
-
Average selling price increased 11% to $385,900.
-
Homebuilding operating income rose 91% to $49.6 million. This included
inventory-related charges of $6.0 million, compared to $11.7 million
in the prior year.
-
Homebuilding operating income margin increased 180 basis points to
5.0%. Excluding inventory-related charges, homebuilding operating
income margin improved 90 basis points to 5.6%.
-
Housing gross profits increased 23% to $153.3 million, and the
related housing gross profit margin was 15.4%.
-
Housing gross profit margin excluding inventory-related
charges was 16.0%, representing a year-over-year decrease
of 30 basis points.
-
Adjusted housing gross profit margin, a metric that
excludes the amortization of previously capitalized
interest and inventory-related charges, increased 30 basis
points to 21.0%.
-
Selling, general and administrative expenses improved 120
basis points to 10.4% of housing revenues from 11.6%, marking
a second quarter record for the Company.
-
Land sales generated profits of $.2 million, compared to
losses of $5.4 million that mainly resulted from land sale
impairments associated with the wind down of the Company's
Metro Washington, D.C. operations in 2016.
-
All interest incurred was capitalized, which resulted in no interest
expense, compared to $2.0 million of interest expense.
-
Financial services pretax income rose to $2.8 million, up from $1.5
million, mainly due to income from the Company's recently formed
mortgage banking joint venture with Stearns Lending, LLC, which was
operational in all of the Company's served markets outside of
California as of May 31, 2017. The joint venture, KBHS Home Loans,
LLC, became operational in California earlier this month.
-
Pretax income increased 110% to $52.0 million. Excluding
inventory-related charges, pretax income grew 59% to $58.0 million.
-
Income tax expense was $20.2 million, and represented an effective tax
rate of 38.9%, compared to 37.1%.
-
Net income more than doubled to $31.8 million, or $.33 per diluted
share.
Six Months Ended May 31, 2017 (comparisons on a
year-over-year basis)
-
Total revenues increased 22% to $1.82 billion.
-
Deliveries grew 12% to 4,804 homes.
-
Average selling price advanced 9% to $376,100.
-
Homebuilding operating income increased 67% to $74.8 million.
-
Inventory-related charges totaled $10.0 million, compared to $13.7
million.
-
Net income rose 60% to $46.0 million, and earnings per diluted share
advanced 58% to $.49 from $.31.
Backlog and Net Orders (comparisons on a
year-over-year basis)
-
Net order value grew 15% to $1.38 billion on a 5% increase in net
orders to 3,416, primarily reflecting strength in the Company's West
Coast and Southwest regions.
-
In the West Coast region, net order value increased 23%; in the
Southwest region, net order value advanced 19%.
-
Company-wide, net orders per community averaged 4.8 per month, up
7%.
-
Ending backlog value grew 19% to $2.18 billion, with homes in backlog
up 8% to 5,612 and the average selling price of those homes rising 11%.
-
The cancellation rate as a percentage of beginning backlog for the
quarter improved to 19% from 21%, and as a percentage of gross orders
remained steady at 21%.
-
Average community count for the quarter decreased 2% to 238,
reflecting a decrease in the Company's Southeast region that was
largely offset by increases in its other three regions. Ending
community count was down 2% to 236.
Balance Sheet as of May 31, 2017 (comparisons
to November 30, 2016)
-
The Company had total liquidity of $591.2 million, including cash and
cash equivalents of $348.6 million and availability under its
unsecured revolving credit facility.
-
There were no cash borrowings outstanding under the Company's
unsecured revolving credit facility.
-
Inventories increased to $3.49 billion, with investments in land
acquisition and development totaling $706.6 million for the six months
ended May 31, 2017.
-
Lots owned or controlled aggregated to 45,085, with 80% owned.
-
Notes payable decreased to $2.51 billion from $2.64 billion, primarily
due to the early redemption of $100 million of senior notes in the
2017 first quarter using internally generated cash.
-
The ratio of debt to capital improved to 58.6%, and the ratio of net
debt to capital was 54.9%.
Earnings Conference Call
The conference call to discuss the Company's second quarter 2017
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 www.kbhome.com.
About KB Home
KB Home (NYSE: KBH) 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 homebuilder
listed on the New York Stock Exchange, 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 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;
changes in existing tax laws or enacted corporate income tax rates; 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, gaining share and scale in our served 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 returns-focused growth plan and achieve the
associated revenue, margin, profitability, cash flow, community
reactivation, land sales, business growth, asset efficiency, return on
invested capital, return on equity, net debt-to-capital ratio and other
financial and operational targets and objectives; the ability of our
homebuyers to obtain residential mortgage loans and mortgage banking
services; the performance of mortgage lenders to our homebuyers;
completing the wind down of Home Community Mortgage as planned; the
performance of KBHS Home Loans, LLC, our mortgage banking joint venture
with Stearns Lending, LLC; 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 Three Months and Six Months Ended May 31, 2017 and 2016
(In Thousands, Except Per Share Amounts - Unaudited)
|
|
|
|
|
|
|
Three Months Ended May 31,
|
|
Six Months Ended May 31,
|
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Total revenues
|
|
|
$
|
1,002,794
|
|
|
$
|
811,050
|
|
|
$
|
1,821,390
|
|
|
$
|
1,489,421
|
|
|
Homebuilding:
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
$
|
1,000,072
|
|
|
$
|
808,462
|
|
|
$
|
1,816,318
|
|
|
$
|
1,484,204
|
|
|
Costs and expenses
|
|
|
(950,513
|
)
|
|
(782,524
|
)
|
|
(1,741,482
|
)
|
|
(1,439,274
|
)
|
|
Operating income
|
|
|
49,559
|
|
|
25,938
|
|
|
74,836
|
|
|
44,930
|
|
|
Interest income
|
|
|
202
|
|
|
134
|
|
|
400
|
|
|
286
|
|
|
Interest expense
|
|
|
—
|
|
|
(1,970
|
)
|
|
(6,307
|
)
|
|
(5,667
|
)
|
|
Equity in income (loss) of unconsolidated joint ventures
|
|
|
(596
|
)
|
|
(825
|
)
|
|
135
|
|
|
(1,428
|
)
|
|
Homebuilding pretax income
|
|
|
49,165
|
|
|
23,277
|
|
|
69,064
|
|
|
38,121
|
|
|
Financial services:
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
2,722
|
|
|
2,588
|
|
|
5,072
|
|
|
5,217
|
|
|
Expenses
|
|
|
(816
|
)
|
|
(871
|
)
|
|
(1,635
|
)
|
|
(1,730
|
)
|
|
Equity in income (loss) of unconsolidated joint ventures
|
|
|
911
|
|
|
(197
|
)
|
|
940
|
|
|
(784
|
)
|
|
Financial services pretax income
|
|
|
2,817
|
|
|
1,520
|
|
|
4,377
|
|
|
2,703
|
|
|
Total pretax income
|
|
|
51,982
|
|
|
24,797
|
|
|
73,441
|
|
|
40,824
|
|
|
Income tax expense
|
|
|
(20,200
|
)
|
|
(9,200
|
)
|
|
(27,400
|
)
|
|
(12,100
|
)
|
|
Net income
|
|
|
$
|
31,782
|
|
|
$
|
15,597
|
|
|
$
|
46,041
|
|
|
$
|
28,724
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
.37
|
|
|
$
|
.18
|
|
|
$
|
.54
|
|
|
$
|
.33
|
|
|
Diluted
|
|
|
$
|
.33
|
|
|
$
|
.17
|
|
|
$
|
.49
|
|
|
$
|
.31
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
85,445
|
|
|
84,196
|
|
|
85,285
|
|
|
86,704
|
|
|
Diluted
|
|
|
97,732
|
|
|
94,720
|
|
|
96,975
|
|
|
97,060
|
|
|
|
|
|
|
KB HOME
CONSOLIDATED BALANCE SHEETS
(In Thousands - Unaudited)
|
|
|
|
|
|
|
May 31,
2017
|
|
November 30,
2016
|
|
Assets
|
|
|
|
|
|
|
Homebuilding:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
348,588
|
|
|
$
|
592,086
|
|
Receivables
|
|
|
234,712
|
|
|
231,665
|
|
Inventories
|
|
|
3,488,204
|
|
|
3,403,228
|
|
Investments in unconsolidated joint ventures
|
|
|
64,000
|
|
|
64,016
|
|
Deferred tax assets, net
|
|
|
711,885
|
|
|
738,985
|
|
Other assets
|
|
|
99,996
|
|
|
91,145
|
|
|
|
|
4,947,385
|
|
|
5,121,125
|
|
Financial services
|
|
|
11,410
|
|
|
10,499
|
|
Total assets
|
|
|
$
|
4,958,795
|
|
|
$
|
5,131,624
|
|
|
|
|
|
|
|
|
Liabilities and stockholders' equity
|
|
|
|
|
|
|
Homebuilding:
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
186,993
|
|
|
$
|
215,331
|
|
Accrued expenses and other liabilities
|
|
|
487,836
|
|
|
550,996
|
|
Notes payable
|
|
|
2,510,121
|
|
|
2,640,149
|
|
|
|
|
3,184,950
|
|
|
3,406,476
|
|
Financial services
|
|
|
1,457
|
|
|
2,003
|
|
Stockholders' equity
|
|
|
1,772,388
|
|
|
1,723,145
|
|
Total liabilities and stockholders' equity
|
|
|
$
|
4,958,795
|
|
|
$
|
5,131,624
|
|
|
|
|
|
KB HOME
SUPPLEMENTAL INFORMATION
For the Three Months and Six Months Ended May 31, 2017 and 2016
(In Thousands, Except Average Selling Price - Unaudited)
|
|
|
|
|
|
|
Three Months Ended May 31,
|
|
Six Months Ended May 31,
|
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Homebuilding revenues:
|
|
|
|
|
|
|
|
|
|
|
Housing
|
|
|
$
|
995,660
|
|
|
$
|
807,408
|
|
|
$
|
1,806,607
|
|
|
$
|
1,480,054
|
|
|
Land
|
|
|
4,412
|
|
|
1,054
|
|
|
9,711
|
|
|
4,150
|
|
|
Total
|
|
|
$
|
1,000,072
|
|
|
$
|
808,462
|
|
|
$
|
1,816,318
|
|
|
$
|
1,484,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
Construction and land costs
|
|
|
|
|
|
|
|
|
|
|
Housing
|
|
|
$
|
842,377
|
|
|
$
|
682,303
|
|
|
$
|
1,535,164
|
|
|
$
|
1,247,131
|
|
|
Land
|
|
|
4,219
|
|
|
6,411
|
|
|
9,512
|
|
|
10,401
|
|
|
Subtotal
|
|
|
846,596
|
|
|
688,714
|
|
|
1,544,676
|
|
|
1,257,532
|
|
|
Selling, general and administrative expenses
|
|
|
103,917
|
|
|
93,810
|
|
|
196,806
|
|
|
181,742
|
|
|
Total
|
|
|
$
|
950,513
|
|
|
$
|
782,524
|
|
|
$
|
1,741,482
|
|
|
$
|
1,439,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense:
|
|
|
|
|
|
|
|
|
|
|
Interest incurred
|
|
|
$
|
43,344
|
|
|
$
|
46,258
|
|
|
$
|
87,738
|
|
|
$
|
92,509
|
|
|
Loss on early extinguishment of debt
|
|
|
—
|
|
|
—
|
|
|
5,685
|
|
|
—
|
|
|
Interest capitalized
|
|
|
(43,344
|
)
|
|
(44,288
|
)
|
|
(87,116
|
)
|
|
(86,842
|
)
|
|
Total
|
|
|
$
|
—
|
|
|
$
|
1,970
|
|
|
$
|
6,307
|
|
|
$
|
5,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other information:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
$
|
2,347
|
|
|
$
|
2,821
|
|
|
$
|
4,814
|
|
|
$
|
5,602
|
|
|
Amortization of previously capitalized interest
|
|
|
50,471
|
|
|
35,557
|
|
|
89,855
|
|
|
66,239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average selling price:
|
|
|
|
|
|
|
|
|
|
|
West Coast |
|
|
$
|
631,000
|
|
|
$
|
570,200
|
|
|
$
|
611,100
|
|
|
$
|
564,800
|
|
|
Southwest
|
|
|
289,400
|
|
|
284,900
|
|
|
289,200
|
|
|
285,700
|
|
|
Central
|
|
|
289,000
|
|
|
264,000
|
|
|
282,800
|
|
|
262,300
|
|
|
Southeast
|
|
|
289,600
|
|
|
278,400
|
|
|
288,100
|
|
|
275,200
|
|
|
Total
|
|
|
$
|
385,900
|
|
|
$
|
346,700
|
|
|
$
|
376,100
|
|
|
$
|
345,600
|
|
|
|
|
|
|
KB HOME
SUPPLEMENTAL INFORMATION
For the Three Months and Six Months Ended May 31, 2017 and 2016
(Dollars in Thousands - Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended May 31,
|
|
Six Months Ended May 31,
|
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Homes delivered:
|
|
|
|
|
|
|
|
|
|
|
West Coast |
|
|
730
|
|
|
581
|
|
|
1,336
|
|
|
1,089
|
|
Southwest
|
|
|
436
|
|
|
392
|
|
|
843
|
|
|
742
|
|
Central
|
|
|
1,005
|
|
|
906
|
|
|
1,866
|
|
|
1,671
|
|
Southeast
|
|
|
409
|
|
|
450
|
|
|
759
|
|
|
780
|
|
Total
|
|
|
2,580
|
|
|
2,329
|
|
|
4,804
|
|
|
4,282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net orders:
|
|
|
|
|
|
|
|
|
|
|
West Coast |
|
|
1,065
|
|
|
995
|
|
|
1,891
|
|
|
1,550
|
|
Southwest
|
|
|
629
|
|
|
541
|
|
|
1,085
|
|
|
900
|
|
Central
|
|
|
1,275
|
|
|
1,210
|
|
|
2,235
|
|
|
2,111
|
|
Southeast
|
|
|
447
|
|
|
503
|
|
|
785
|
|
|
960
|
|
Total
|
|
|
3,416
|
|
|
3,249
|
|
|
5,996
|
|
|
5,521
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net order value:
|
|
|
|
|
|
|
|
|
|
|
West Coast |
|
|
$
|
705,358
|
|
|
$
|
572,882
|
|
|
$
|
1,288,861
|
|
|
$
|
910,493
|
|
Southwest
|
|
|
184,802
|
|
|
155,337
|
|
|
316,533
|
|
|
262,625
|
|
Central
|
|
|
368,007
|
|
|
328,242
|
|
|
642,890
|
|
|
581,457
|
|
Southeast
|
|
|
125,345
|
|
|
146,541
|
|
|
220,650
|
|
|
273,101
|
|
Total
|
|
|
$
|
1,383,512
|
|
|
$
|
1,203,002
|
|
|
$
|
2,468,934
|
|
|
$
|
2,027,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 31, 2017 |
|
May 31, 2016 |
|
|
|
|
Homes
|
|
Value
|
|
Homes
|
|
Value
|
|
Backlog data:
|
|
|
|
|
|
|
|
|
|
|
West Coast |
|
|
1,468
|
|
|
$
|
999,269
|
|
|
1,199
|
|
|
$
|
703,346
|
|
Southwest
|
|
|
1,046
|
|
|
300,530
|
|
|
763
|
|
|
218,047
|
|
Central
|
|
|
2,348
|
|
|
674,406
|
|
|
2,282
|
|
|
638,052
|
|
Southeast
|
|
|
750
|
|
|
207,211
|
|
|
961
|
|
|
269,657
|
|
Total
|
|
|
5,612
|
|
|
$
|
2,181,416
|
|
|
5,205
|
|
|
$
|
1,829,102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 and ratio of net debt
to capital, neither of which are 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 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:
|
|
|
|
|
|
Three Months Ended May 31,
|
|
Six Months Ended May 31,
|
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Housing revenues
|
|
|
$
|
995,660
|
|
|
$
|
807,408
|
|
|
$
|
1,806,607
|
|
|
$
|
1,480,054
|
|
|
Housing construction and land costs
|
|
|
(842,377
|
)
|
|
(682,303
|
)
|
|
(1,535,164
|
)
|
|
(1,247,131
|
)
|
|
Housing gross profits
|
|
|
153,283
|
|
|
125,105
|
|
|
271,443
|
|
|
232,923
|
|
|
Add: Inventory-related charges (a)
|
|
|
6,001
|
|
|
6,384
|
|
|
10,009
|
|
|
7,563
|
|
|
Housing gross profits excluding inventory-related charges
|
|
|
159,284
|
|
|
131,489
|
|
|
281,452
|
|
|
240,486
|
|
|
Add: Amortization of previously capitalized interest (b)
|
|
|
49,345
|
|
|
35,551
|
|
|
88,218
|
|
|
65,757
|
|
|
Adjusted housing gross profits
|
|
|
$
|
208,629
|
|
|
$
|
167,040
|
|
|
$
|
369,670
|
|
|
$
|
306,243
|
|
|
Housing gross profit margin
|
|
|
15.4
|
%
|
|
15.5
|
%
|
|
15.0
|
%
|
|
15.7
|
%
|
|
Housing gross profit margin excluding inventory-related charges
|
|
|
16.0
|
%
|
|
16.3
|
%
|
|
15.6
|
%
|
|
16.2
|
%
|
|
Adjusted housing gross profit margin
|
|
|
21.0
|
%
|
|
20.7
|
%
|
|
20.5
|
%
|
|
20.7
|
%
|
|
|
|
(a)
|
|
|
Represents inventory impairment and land option contract abandonment
charges associated with housing operations.
|
|
|
|
|
|
|
(b)
|
|
|
Represents the amortization of previously capitalized interest
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) housing inventory impairment
and land option contract abandonment charges (as applicable) recorded
during a given period and (2) amortization of previously capitalized
interest associated with housing operations, 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, and
the amortization of previously capitalized interest associated with
housing operations, 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, and amortization of previously capitalized interest associated
with housing operations. This financial measure assists management in
making strategic decisions regarding community location and product mix,
product pricing and construction pace.
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,
2017
|
|
November 30,
2016
|
|
Notes payable
|
|
|
$
|
2,510,121
|
|
|
$
|
2,640,149
|
|
|
Stockholders' equity
|
|
|
1,772,388
|
|
|
1,723,145
|
|
|
Total capital
|
|
|
$
|
4,282,509
|
|
|
$
|
4,363,294
|
|
|
Ratio of debt to capital
|
|
|
58.6
|
%
|
|
60.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes payable
|
|
|
$
|
2,510,121
|
|
|
$
|
2,640,149
|
|
|
Less: Cash and cash equivalents
|
|
|
(348,588
|
)
|
|
(592,086
|
)
|
|
Net debt
|
|
|
2,161,533
|
|
|
2,048,063
|
|
|
Stockholders' equity
|
|
|
1,772,388
|
|
|
1,723,145
|
|
|
Total capital
|
|
|
$
|
3,933,921
|
|
|
$
|
3,771,208
|
|
|
Ratio of net debt to capital
|
|
|
54.9
|
%
|
|
54.3
|
%
|
|
|
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, by capital (notes payable, net of
homebuilding cash and cash equivalents, 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/20170627005419/en/
KB Home
Jill Peters, Investor Relations Contact
310-893-7456
or jpeters@kbhome.com
or
Susan
Martin, Media Contact
310-231-4142 or smartin@kbhome.com
Source: KB Home
News Provided by Acquire Media