Company News

KB Home Reports Record Fourth Quarter Earnings; Net Income Advances 20.6%; EPS Beats Consensus Estimates; Year-end Backlog Reaches an All-time High of 11,225 Units

January 10, 2002 at 12:00 AM EST
KB Home Reports Record Fourth Quarter Earnings; Net Income Advances 20.6%; EPS Beats Consensus Estimates; Year-end Backlog Reaches an All-time High of 11,225 Units
News Release
Printer Friendly Version View printer-friendly version
<< Back
KB Home Reports Record Fourth Quarter Earnings; Net Income Advances 20.6%; EPS Beats Consensus Estimates; Year-end Backlog Reaches an All-time High of 11,225 Units

LOS ANGELES--(BUSINESS WIRE)--Jan. 10, 2002--KB Home (NYSE: KBH), one of the largest homebuilders in the United States and France, today announced record results for its fourth quarter and fiscal year ended November 30, 2001. Highlights include:



  • Unit deliveries reached an all-time fourth quarter high of 7,883 units, driving total revenues to $1.45 billion, the highest fourth quarter level in the Company's history. Net income for the quarter advanced 20.6% to a record $88.5 million, or $2.03 per diluted share.







  • Full year 2001 net income advanced to $214.2 million, or $5.50 per diluted share, the highest level in the Company's history. Full year unit deliveries of 24,868 and total revenues of $4.57 billion surpassed the Company's previous records of 22,847 deliveries and $3.93 billion in revenues established in 2000. The Company's deliveries have grown at a five-year compound annual rate of 19%.





  • The Company ended the year with substantial liquidity, including $281.3 million in cash and $564.1 million of available borrowing capacity under its revolving credit facility.







  • The Company's ratio of debt to total capital improved 4 percentage points to 49.9% at November 30, 2001 from 53.9% at November 30, 2000. Stockholders' equity rose 66.9% to $1.09 billion at November 30, 2001 from $654.8 million at November 30, 2000. The Company's average return on equity for the last five years has exceeded 20%.





  • Year-end backlog exceeded 11,000 units for the first time in the Company's history and represented future revenues of $1.91 billion at November 30, 2001, providing excellent visibility for 2002 results.



"In the fourth quarter, with EPS of $2.03, KB Home continued the trend of consistent financial performance and beat Wall Street consensus estimates by more than 10%. The homebuilding industry in general and KB Home in particular have exhibited remarkable resilience during the recent economic slowdown and the aftermath of the tragic events of September 11th," commented Bruce Karatz, Chairman and Chief Executive Officer. "We believe the industry's performance during this economic downturn demonstrates the strength of our industry and reflects the positive evolution of large public homebuilders. Our capital structure and operational disciplines allow us to deliver more consistent results even during challenging times."



Net income rose 20.6% to $88.5 million, or $2.03 per diluted share, in the fourth quarter from $73.4 million, or $2.00 per diluted share for the same quarter of 2000. The increase in net income for the quarter ended November 30, 2001 stemmed from higher unit delivery volume and increased income from the Company's mortgage banking operations. The Company's year-over-year earnings per share growth for the fourth quarter was adversely impacted by an 18.3% increase in the average number of shares outstanding resulting from the Company's conversion of its Feline Prides in August 2001.

Unit deliveries (including deliveries from joint ventures) rose



  • 10.0% to 7,883 units in the fourth quarter of 2001 from 7,168 units in the same quarter of 2000. Total construction revenues for the quarter ended November 30, 2001 were $1.43 billion, the highest for any fourth quarter in the Company's history, up from $1.23 billion for the same quarter a year ago. Housing revenues reached $1.40 billion, increasing





  • 16.2% from $1.20 billion in the year-earlier quarter due to the combined effects of higher unit volume and a higher average selling price, which rose 5.2% to $178,800 for the fourth quarter of 2001 from $169,900 for the same quarter of 2000. Construction revenues for the fourth quarter of 2001 included French commercial revenues of $16.3 million and land sales of $13.1 million.



"We had an excellent fourth quarter and full year in 2001 with solid increases in unit volume, revenues and earnings," stated Karatz. "The strategies we have employed to reduce the financial risk in our business and deliver predictable, sustainable performance are working as planned. Our unit deliveries and earnings have grown at five-year compound annual rates of 19% and 37%, respectively, and our average return on equity for the last five years has exceeded 20%. It is my hope that the multiples and valuations in the homebuilding industry will increase as KB Home and other homebuilders continue to demonstrate that our industry has become less sensitive to economic swings."

Construction operating income for the fourth quarter totaled $135.1 million compared with $121.5 million in the year-earlier quarter, an increase of 11.2%, generated mainly from the combined effects of higher unit volume and housing gross margins. The Company's housing gross margin rose to 20.8% in the three months ended November 30, 2001 from 20.6% in the same period of 2000. Commercial activities and land sales produced total profits of $3.6 million in the fourth quarter of 2001 compared to profits of $2.7 million generated in the fourth quarter 2000.

Pretax income from the Company's mortgage banking operations rose



  • 80.7% to $14.5 million in the fourth quarter of 2001 from $8.0 million in the same quarter a year ago, benefiting from higher domestic unit volume, increased retention and a favorable ratio of fixed rate to variable rate loans.



"We ended the year in a solid financial position with over $280 million in cash, plenty of available borrowing capacity and our leverage ratio below 50%," commented Karatz. "The financial flexibility we have achieved as a result of strong earnings growth and the strategic management of our business should enable us to navigate through the current economic climate and seize opportunities presented."

Total stockholders' equity advanced 66.9% from the prior year to $1.09 billion at November 30, 2001. On a per share basis, stockholders' equity was $25.87 at November 30, 2001 compared to $19.16 at November 30, 2000. The Company's ratio of debt to total capital at the end of the fourth quarter improved 4 percentage points to 49.9% in 2001 from 53.9% in 2000. Net of the construction cash balance at November 30, 2001, the ratio of net debt to total capital was 42.9%. At the end of the fourth quarter of 2001, the Company had $564.1 million of available borrowing capacity as no amounts were outstanding under its revolving credit facility.

The Company's backlog value reached $1.91 billion on 11,225 units at November 30, 2001, the highest level for any year-end in its history. At November 30, 2001, the Company had approximately two quarters of deliveries in backlog, providing excellent visibility for 2002 earnings. Net orders of 5,353 for the fourth quarter were down slightly from 5,418 net orders in the year-earlier quarter on mixed results as year-over-year increases in net orders posted by the Central and France regions were offset by decreases in the West Coast and Southwest regions. Net orders remained volatile following the September 11th attack but regained strength late in the quarter. Year-over-year net order comparisons for the final two months of the quarter showed sequential improvement with the month of November turning positive results. Subsequent to the end of the quarter, the overall net order comparison for the month of December also remained slightly positive.

For the year ended November 30, 2001, unit deliveries (including joint ventures) totaled 24,868, increasing 8.8% from 22,847 in the year-earlier period and establishing a new company record. Total revenues for the year rose 16.4% to $4.57 billion from $3.93 billion in the year ago period. Net income for the year ended November 30, 2001 was $214.2 million, or $5.50 per diluted share compared to $170.3 million, or $4.25 per diluted share in the year ago period (excluding a one-time gain of $39.6 million or $.99 per diluted share on the issuance of stock by the Company's French subsidiary in an initial public offering). Including this gain, net income and diluted earnings per share for the year ended November 30, 2000 were $210.0 million and $5.24, respectively.

The Conference Call on Fourth Quarter 2001 Earnings will be broadcast live TODAY at 8:00 AM Pacific Standard Time, 11:00 AM Eastern Standard Time. To listen, please go to the Investor Relations section of the Company's Web site at www.kbhome.com.

KB Home is one of America's premier homebuilders with domestic operating divisions in the following regions and states: West Coast -- California; Southwest -- Arizona, Nevada and New Mexico; and Central -- Colorado, Texas and Florida. Kaufman & Broad S.A., the Company's majority-owned subsidiary, is one of the largest homebuilders in France. In fiscal 2001, the Company delivered homes to 24,868 families in the United States and France. It also operates a full-service mortgage company for the convenience of its buyers. Founded in 1957, KB Home is a Fortune 500 company listed on the New York Stock Exchange under the ticker symbol "KBH." For more information about any of KB Home's new home communities, call 1-800-34-HOMES or visit the Company's web site at www.kbhome.com.

Except for the historical information contained herein, certain matters discussed in this press release are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995, including any statements concerning future financial performance, business and prospects, and future Company actions and their expected results. These forward-looking statements are subject to risks, uncertainties and assumptions including, but not limited to, the continued impact of the recent terrorist activities and U.S. response, accelerating recessionary trends and other adverse changes in general economic conditions, material prices, labor costs, interest rates, uncertainties associated with California's electricity supply problems, the secondary market for loans, consumer confidence, competition, currency exchange rates (insofar as they affect the Company's operations in France), environmental factors, government regulations affecting the Company's operations, the availability and cost of land in desirable areas, unanticipated violations of Company policy, unanticipated legal proceedings, and conditions in the capital, credit and homebuilding markets. See the Company's Annual Report on Form 10-K and its Annual Report to Shareholders for the year ended November 30, 2000 and its other filings for a further discussion of these and other risks and uncertainties applicable to the Company's business.



                                KB HOME
                   CONSOLIDATED STATEMENTS OF INCOME
                For the Twelve Months and Three Months
                   Ended November 30, 2001 and 2000
               (In Thousands, Except Per Share Amounts)

                        Twelve Months              Three Months
                      2001         2000         2001          2000
                 ------------ ------------ ------------  ------------
Total revenues   $  4,574,184 $  3,930,858 $  1,450,861  $  1,244,067
                 ============ ============ ============  ============
Construction:
Revenues            4,501,715    3,870,488    1,426,419     1,225,152
Costs and
 expenses          (4,149,399)  (3,581,879)  (1,291,341)   (1,103,667)
                   -----------  -----------  -----------   -----------

Operating income      352,316      288,609      135,078       121,485

Interest income         3,559        5,782          913           761
Interest expense,
 net of amounts
 capitalized          (41,072)     (31,479)     (10,349)       (9,152)
Minority interests    (27,932)     (31,640)      (7,658)      (10,699)
Equity in pretax
 of unconsolidated
 joint ventures         3,875        2,926        1,494           673
Gain on issuance
 of French
 subsidiary stock           -       39,630            -             -
                   -----------  -----------  -----------   -----------
Construction
 pretax income        290,746      273,828      119,478       103,068
                   -----------  -----------  -----------   -----------
Mortgage banking:

Revenues:
Interest income        21,935       21,130        6,073         5,229
Other                  50,534       39,240       18,369        13,686
                   -----------  -----------  -----------   -----------
                       72,469       60,370       24,442        18,915

Expenses:
 Interest             (18,436)     (19,374)      (3,984)       (5,118)
 General and
  administrative      (20,262)     (17,164)      (5,928)       (5,758)
                   -----------  -----------  -----------   -----------
 Mortgage banking
  pretax income        33,771       23,832       14,530         8,039
                   -----------  -----------  -----------   -----------
Total pretax income   324,517      297,660      134,008       111,107

Income taxes         (110,300)     (87,700)     (45,500)      (37,700)
                   -----------  -----------  -----------   -----------
Net income         $  214,217   $  209,960   $   88,508    $   73,407
                   ==========   ===========  ==========    ===========
Basic earnings
 per share         $     5.72   $     5.39   $     2.10    $     2.10
                   ==========   ===========  ==========    ===========
Diluted earnings
 per share         $     5.50   $     5.24   $     2.03    $     2.00
                   ==========   ===========  ==========    ===========
Basic average
 shares outstanding    37,465       38,931       42,188        34,977
                   ==========   ===========  ==========    ===========
Diluted average
 shares outstanding    38,919       40,069       43,500        36,756
                   ==========   ===========  ==========    ===========


                                KB HOME
                      CONSOLIDATED BALANCE SHEETS
                            (In Thousands)

                       November 30,      August 31,     November 30,
                           2001             2001            2000
                      --------------    ------------   --------------
ASSETS

Construction:
 Cash and cash
  equivalents          $    266,195     $     33,725    $    21,385
 Receivables                437,043          371,581        306,581
 Inventories              1,884,761        1,969,675      1,657,401
 Investments in
  unconsolidated
  joint ventures              8,844            8,696         10,407
 Deferred income taxes      118,584           66,633         73,842
 Goodwill                   190,785          192,399        202,177
 Other assets                77,310           96,137         89,975
                       --------------   --------------  -------------
                          2,983,522        2,738,846      2,361,768
                       --------------   --------------  -------------
Mortgage banking:
 Cash and cash
  equivalents                15,138           11,456         11,696
 Receivables                686,403          540,322        446,302
 Other assets                 7,803            8,574          9,155
                       --------------   --------------  -------------
                            709,344          560,352        467,153
                       --------------   --------------  -------------
Total assets           $  3,692,866     $  3,299,198    $ 2,828,921
                       ==============   ==============  =============

LIABILITIES AND STOCKHOLDERS' EQUITY

Construction:
 Accounts payable      $    446,279     $    343,861    $   311,537
 Accrued expenses
  and other liabilities     351,144          246,495        201,672
 Mortgages and
  notes payable           1,088,615        1,135,293        987,980
                       --------------   --------------  -------------
                          1,886,038        1,725,649      1,501,189
                       --------------   --------------  -------------
Mortgage banking:
 Accounts payable
  and accrued expenses       33,289           15,032         11,135
 Notes payable              595,035          485,631        385,294
 Collateralized
  mortgage obligations
  secured by mortgage-
  backed securities          22,359           23,934         29,928
                       --------------   --------------  -------------
                            650,683          524,597        426,357
                       --------------   --------------  -------------
Minority interests           63,664           59,407        246,616
Stockholders' equity      1,092,481          989,545        654,759
                       --------------   --------------  -------------
Total liabilities
 and stockholders'
 equity                $  3,692,866     $  3,299,198    $ 2,828,921
                       ==============   ==============  =============


                                KB HOME
                       SUPPLEMENTAL INFORMATION
                For the Twelve Months and Three Months
                   Ended November 30, 2001 and 2000

                        Twelve Months              Three Months
                      2001         2000         2001          2000
                 ------------ ------------ ------------  -----------
Construction Revenues:
 Housing         $ 4,367,001  $ 3,769,154  $ 1,397,061   $ 1,202,023
 Commercial           69,888          802       16,298           802
 Land                 64,826      100,532       13,060        22,327
                 -----------  -----------  -----------   -----------
    Total        $ 4,501,715  $ 3,870,488  $ 1,426,419   $ 1,225,152
                 ===========  ===========  ===========   ===========
                 ---------------------------------------------------
                        Twelve Months              Three Months
                      2001         2000         2001          2000
                 ------------ ------------ ------------  -----------
Costs and Expenses:
 Construction and
  land costs     $ 3,612,936  $ 3,123,869  $ 1,132,447   $   974,527
 Selling,
  general and
  administrative
  expenses           536,463      458,010      158,894       129,140
                 -----------  -----------  -----------   -----------
     Total       $ 4,149,399  $ 3,581,879  $ 1,291,341   $ 1,103,667
                 ===========  ===========  ===========   ===========
                 ---------------------------------------------------
                        Twelve Months              Three Months
                      2001         2000         2001          2000
                 ------------ ------------ ------------  -----------
Average Sales Prices:
 West Coast      $   283,100  $   257,000   $  286,300   $   262,700
 Southwest           157,600      145,200      161,000       148,200
 Central             140,700      128,600      146,100       130,400
 Foreign             146,300      158,700      146,500       153,500
                 -----------  -----------  -----------   -----------
     Total       $   178,000  $   168,300   $  178,800   $   169,900
                 ===========  ===========   ===========  ===========
                 ---------------------------------------------------
                        Twelve Months              Three Months
                      2001         2000         2001          2000
                 ------------ ------------ ------------  -----------
Net Orders:
 West Coast            4,772        6,018          973         1,198
 Southwest             6,478        6,036        1,156         1,337
 Central              10,029        8,923        2,051         1,941
 Foreign               3,436        2,854        1,156           836
                 -----------  -----------  -----------   -----------
     Total            24,715       23,831        5,336         5,312
                 ===========  ===========   ===========  ===========
 Unconsolidated
  Joint Ventures:        220          444           17           106
                 ===========  ===========   ===========  ===========
                 ---------------------------------------------------
                        Twelve Months              Three Months
                      2001         2000         2001          2000
                 ------------ ------------ ------------  -----------
Unit Deliveries:
 West Coast            5,550        5,476        1,628         1,697
 Southwest             6,238        5,832        1,797         1,623
 Central               9,368        8,112        3,069         2,631
 Foreign               3,382        2,972        1,320         1,124
                 -----------  -----------  -----------   -----------
     Total            24,538       22,392        7,814         7,075
                 ===========  ===========   ===========  ===========
 Unconsolidated
  Joint Ventures:        330          455           69            93
                 ===========  ===========   ===========  ===========

                     November 30, 2001          November 30, 2000
                 ---------------------------------------------------
Backlog Data:  Backlog Units Backlog Value Backlog Units Backlog Value
                 -----------  -----------  -----------   -----------
 West Coast            1,643  $   474,645        2,421   $   643,620
 Southwest             2,551      420,282        2,311       345,609
 Central               4,921      700,251        4,010       541,258
 Foreign               2,012      294,870        1,817       272,901
                 -----------  -----------  -----------   -----------
     Total            11,127  $ 1,890,048       10,559   $ 1,803,388
                 ===========  ===========   ===========  ===========
 Unconsolidated
  Joint Ventures:         98  $    20,384          208   $    42,224
                 ===========  ===========   ===========  ===========









CONTACT: KB Home
Clem Teng, Investor Relations
310/231-4033 or cteng@kbhome.com
Kate Mulhearn, Media Contact
310/231-4147 or kmulhearn@kbhome.com