Forward-Looking Statements
Items in this presentation, and statements by KB Home management in relation to this presentation or otherwise, may be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward- looking statements are based on current (at the time made) expectations and projections about future events and are subject to risks, uncertainties, and assumptions about our operations, economic and market factors, and the homebuilding industry, among other things. These statements 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; the execution of any securities repurchases pursuant to our board of directors' authorization; material and trade costs and availability, including building materials and appliances, 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 the Internal Revenue Service's recent 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 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.
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Built to Order Model Provides Competitive Advantages
Buyers Want Choice
Buyers select their floor plan, lot, square footage and personalized finishes in our Design Studios based on what they value and can afford. Approximately 65% to 70% of our business is Built to Order.
Choice Includes Finished Homes
An important complement to our "choice" model is the availability of quick move-in homes in each of our communities to serve the buyer who prioritizes a near-termmove-in date over personalization.
Choice Influences Affordability
Buyers are empowered to significantly influence their overall sales price based on their selections, including a non-premium or premium lot and standard finishes or upgrades. More than 70% of our communities offer plans with square footage below 1,600- smaller homes with similar room counts and livability, at lower starting base prices without compromising gross margin percentages.
Competitive Differentiator
Resale homes are our largest competitor. Our affordable choice offering provides an important point of differentiation in attracting buyers.
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Buyers Value Choice;
As a Result, Our BTO Model Drives
High Monthly Absorption per Community
6.3 | ||||||
4.3 | 4.6 | 4.0 | 4.1 | 4.1 | 3.8 | 3.3 |
3.0 | 3.0 |
2019 | 2020 | 2021 | 2022 | 2023 | ||
KBH | Peer Group Average* | |||||
* Includes DHI, LEN, MDC, MTH, NVR, PHM, TMHC, TOL, TPH. Source: Wolfe Research.
© 2024 KB Home
Built to Order Model Attracts Largest Demand Segments of Market
A Leader in the 1st Time Buyer Segment While Drawing a Mix of Buyers to Our Communities
Q1 2024 Buyer Profile
(Based on Homes Delivered)
15%
11%
50%
24%
Invest in land
positions within prime growth submarkets
Position our product to target the median household income in each submarket
BTO enhances
value and
affordability through choice of lot, square footage, floor plan and elevation, and the ability to personalize in our Design Studios
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1st Time | 2nd Move-Up | |
1st Move-Up | Active Adult | |
While we primarily target the 1st time and affordable 1st move-up buyers, our BTO business model also appeals to 2nd move-up buyers and empty nesters who can make a different set of choices in the same community
© 2024 KB Home
Dedicated to Providing World Class Customer Service
- KB Home's personalized, customer- centric Built-to-Order business model enables us to develop long-term relationships with our customers
- Our community teams partner with customers through each major step of their purchase of a KB home: sale - mortgage - studio - construction - closing - post closing
- Customers recognize the value of our partnership. Recent customer surveys conducted by an independent, third- party source such as TrustBuilder® has given KB Home exceptional customer satisfaction ratings.
5 TrustBuilder® data as of March 12, 2024.
© 2024 KB Home
First Quarter 2024
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© 2024 KB Home
Growth-Oriented Geographic Footprint
Principal Markets
- West Coast: California, Idaho, Washington
- Southwest: Arizona, Nevada
- Central: Colorado, Texas
- Southeast: Florida, North Carolina
Homebuilding Revenues
Deliveries
Average Selling Price
Net Order
Value
Q1 2024 Mix
West Coast Southwest | Central | Southeast |
38% 22% 22% 18%
27% 24% 29% 20%
$674K $451K $365K $418K
40% 20% 23% 17%
Backlog Value | 39% | 22% | 18% | 21% |
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© 2024 KB Home
First Quarter 2024 Highlights
(all comparisons on a year-over-year basis)
- Revenues increased 6% to $1.47 billion
- Homebuilding operating income was $157.7 million, up slightly from $156.5 million
- Homebuilding operating income margin was 10.8%, compared to 11.4%. Excluding inventory-related charges, homebuilding operating income margin was 10.9%, compared to 11.7%.
- Housing gross profit margin was unchanged at 21.5%. Excluding inventory-related charges, housing gross profit margin was 21.6%, compared to 21.8%.
- Selling, general and administrative expenses as a percentage of housing revenues was 10.8%, compared to 10.1%
- Net income increased 10% to $138.7 million and diluted earnings per share grew 21% $1.76
- Net orders increased 55% and net order value grew 58%
- Total liquidity was $1.75 billion, which included $668.1 million of cash and cash equivalents and $1.08 billion of available capacity under the Company's unsecured revolving credit facility, with no cash borrowings outstanding
- During the quarter, the Company repurchased 826,663 shares of its outstanding common stock at a total cost of $50.0 million
- Stockholders' equity increased to $3.88 billion, and book value per share increased 14% to $51.14
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Q1 2024 | Q1 2023 | % Change | ||
Housing Revenues | $1.46 billion | $1.38 billion | 6% | |
Deliveries | 3,037 | 2,788 | 9% | |
Average Selling Price | $480,100 | $494,500 | -3% | |
Net Orders | 3,323 | 2,142 | 55% | |
Net Order Value | $1.58 billion | $1.00 billion | 58% | |
Backlog Homes | 5,796 | 7,016 | -17% | |
Backlog Value | $2.79 billion | $3.31 billion | -16% | |
Ending Community Count | 238 | 256 | -7% | |
Average Community Count | 240 | 251 | -4% | |
Absorption (net orders per | 4.6 | 2.8 | 64% | |
community, per month) | © 2024 KB Home | |||
Housing Revenues
($ in millions)
$1,933
$1,839
$1,715 $1,758
$1,660
$1,574
$1,458
$1,394 $1,379
'22 | '23 | 24 | '22 | '23 | '22 | '23 | '22 | '23 |
First Quarter | Second Quarter | Third Quarter | Fourth Quarter |
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© 2024 KB Home
Average Selling Price
($ in thousands)
$509 | $510 | |||||||
$486 | $495 | $494 | $487 | |||||
$480 | $480 | |||||||
$466 | ||||||||
'22 | '23 | '24 | '22 | '23 | '22 | '23 | '22 | '23 |
First Quarter | Second Quarter | Third Quarter | Fourth Quarter |
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© 2024 KB Home
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KB Home published this content on 20 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 March 2024 21:20:43 UTC.