EL MONTE, Calif.--(BUSINESS WIRE)-- #BuiltOnRelationships--KB Home (NYSE: KBH), one of the largest and most trusted homebuilders in the U.S., today announced the grand opening of Belcourt Place, a new-home community in highly desirable El Monte, California, a vibrant and culturally rich city offering a family friendly activities and a dynamic mix of dining, shopping and entertainment. The new homes are designed for the way people live today, with popular features like modern kitchens overlooking large great ...

TUCSON, Ariz.--(BUSINESS WIRE)-- #BuiltOnRelationships--KB Home (NYSE: KBH), one of the largest and most trusted homebuilders in the U.S., today announced the grand opening of Cielo Reserve, a rare opportunity to own a new single-story home in Tucson's Valencia Corridor, a location close to historic downtown, which showcases pedestrian friendly streets, boutique shopping and trendy eateries. The new homes are designed for the way people live today, with popular features like modern kitchens overlooking larg ...

LOS ANGELES--(BUSINESS WIRE)-- #BuiltOnRelationships--KB Home (NYSE: KBH), one of the largest and most recognized homebuilders in the U.S., has been named to TIME's 2025 list of World's Best Companies. This recognition is presented by TIME and Statista, a leading provider of market and consumer data, and can be viewed on the TIME website. "We are truly honored to be named by TIME as one of the World's Best Companies,†said Jeffrey Mezger, Chairman and Chief Executive Officer of KB Home. "This recognition is ...

LOS ANGELES--(BUSINESS WIRE)---- $KBH #earnings--KB Home (NYSE: KBH) today announced that it will release earnings for its third quarter ended August 31, 2025 after the market closes on Wednesday, September 24, 2025. A live webcast of the Company's earnings conference call will be held the same day at 2:00 p.m. Pacific Time, 5:00 p.m. Eastern Time. To listen to the call, go to the Investor Relations section of the KB Home website at investor.kbhome.com and select the Third Quarter Earnings Conference Call l ...

KB Home (NYSE: KBH ) is a scale US homebuilder focused on the two largest property demand pools: 1) first‑time and first move‑up buyers with exposure to second move‑up and 2) active adults. The company designs and builds attached and detached single‑family homes, townhomes, andEquity strategist (US Equities)Technical focus on fundamental value drivers of business economics to uncover high probability long-term compounders. Seeking to buy at appropriate prices relative to intrinsic worth. Partners are repres ...

Core Insights - The S&P Composite Homebuilders Index rose by 1.5%, reaching its highest closing point since December 11, 2024, following data that showed U.S. housing starts in July increased to a five-month high, contrary to expectations of a decline in housing starts for July [1] Company Performance - Home Depot saw a stock increase of 3.17% - Lennar's stock rose by 2.15% - LGI Homes experienced a 1.88% increase in stock price - D.R. Horton shares increased by 1.79% - KB Home's stock rose by 1.72% - PulteGroup saw a 1.68% increase - Century Communities' stock rose by 1.44% - Berkshire Hathaway Class B shares increased by 1.42% [1]

Core Viewpoint - The S&P 500 has seen a broad rally, but the homebuilding sector is struggling due to high mortgage rates, rising construction costs, and regulatory pressures [1] Group 1: Factors Affecting Homebuilders - High mortgage rates have persisted, with the 30-year fixed-rate mortgage fluctuating between 6.5% and 7% for nearly two years, significantly higher than the 2.67% seen in December 2020 [5] - Tariffs on construction materials such as steel, copper, and lumber are increasing costs, with year-over-year increases of 13.6% for fabricated steel plates, 15.1% for metal molding and trim, 18.9% for softwood lumber, and 24.2% for machinery equipment and parts [5] - An immigration crackdown is leading to labor shortages, particularly in the South and Midwest, where undocumented workers make up a significant portion of the construction workforce [4] Group 2: Market Performance and Company Analysis - D.R. Horton Inc. reported earnings that beat expectations, but year-over-year numbers still showed a decline, indicating potential challenges ahead for the sector [8] - NVR Inc. is facing headwinds due to its asset-light model and reliance on subcontractors, with expectations of further year-over-year declines in earnings [11] - Lennar Corp. is vulnerable due to its high-volume strategy, which is sensitive to macroeconomic pressures, and reported a 4.4% drop in year-over-year revenue [14] - KB Home, focusing on first-time buyers, is particularly affected by high prices and mortgage rates, with a reported revenue drop of 10.5% year-over-year [17]

Core Viewpoint - KB Home's recent earnings report showed a mixed performance with earnings and revenues beating estimates but declining year-over-year, reflecting challenges in the housing market due to high mortgage rates and affordability concerns [2][3][5]. Earnings & Revenue Discussion - Adjusted earnings per share (EPS) for Q2 fiscal 2025 were $1.5, exceeding the Zacks Consensus Estimate of $1.45 by 3.5%, but down from $2.15 in the same quarter last year [5]. - Total revenues reached $1.53 billion, surpassing the consensus mark of $1.495 billion by 2.3%, yet decreased by 10.5% year-over-year [5]. Segmental Details - Homebuilding segment revenues were $1.525 billion, a decline of 10.4% from $1.702 billion in the prior year, with homes delivered dropping 11% to 3,120 units [6]. - The average selling price (ASP) increased by 1.2% year-over-year to $488,700 [6]. - Net orders fell by 13% to 3,460 units, with the value of net orders decreasing to $1.611 billion from $2.032 billion a year ago [7]. Financial Position - As of May 31, 2025, KB Home had cash and cash equivalents of $308.9 million, down from $598 million at the end of fiscal 2024, with total liquidity of $1.19 billion [12]. - The debt-to-capital ratio increased to 32.2 from 29.4 at the end of fiscal 2024 [12]. Guidance and Outlook - KB Home lowered its fiscal 2025 guidance, now expecting housing revenues between $6.30 billion and $6.5 billion, down from a previous range of $6.6 billion to $7 billion [14]. - The expected housing gross margin is now between 19% and 19.4%, compared to the prior range of 19.2% to 20% [15]. - The company anticipates SG&A expenses as a percentage of housing revenues to be in the range of 10.2% to 10.6% [16]. Market Performance - KB Home's stock has increased by approximately 11.2% since the last earnings report, outperforming the S&P 500 [1]. - The consensus estimate for KB Home has shifted downward by 18% since the earnings release, indicating a negative sentiment among investors [17].

Core Insights - KB Home is experiencing significant challenges due to higher mortgage rates and economic uncertainty, leading to a projected double-digit decline in earnings for the fiscal year [1] - The company reported a revenue drop to $1.53 billion in fiscal Q2 2025, down from $1.71 billion a year ago, with homes delivered falling 11% to 3,120 [2] - Adjusted gross profit margin decreased to 19.7% from 21.2% year-over-year, impacted by price reductions, higher land costs, and reduced operating leverage [3] Financial Performance - KB Home's fiscal Q2 2025 earnings beat the Zacks Consensus Estimate by $0.05, reporting $1.50 compared to the consensus of $1.45 [2] - The company is guiding a full-year gross profit margin of 19% to 19.4%, lower than previous years, with analysts cutting earnings estimates for fiscal 2025 to $6.55, a decline of 22.5% from $8.45 last year [6] - For fiscal 2026, the Zacks Consensus Estimate has decreased to $6.86 from $7.64, indicating a modest earnings growth of 4% [7] Strategic Adjustments - In response to market conditions, KB Home is scaling back on land acquisitions, with investments in land and land development falling 23% to $513.9 million [4] - The company repurchased $200 million in stock at an average price of $54, reflecting a strategy to leverage its cheap stock price [4] - KB Home maintains a total liquidity of $1.19 billion, including $308.9 million in cash, and continues to pay a dividend with a yield of 1.80% [5] Market Sentiment - Shares of KB Home have retreated in 2025 due to tough housing market conditions, although they recently bounced off lows as mortgage rates fell [10][12] - The forward price-to-earnings (P/E) ratio stands at 8.5, indicating the stock is considered cheap, typically associated with a P/E ratio under 10 [12] - There is cautious optimism regarding a potential recovery in earnings, contingent on gross profit margins rising above 20% [13]

PART I. FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) For Q2 2025, KB Home reported **total revenues** of **$1.53 billion** and **net income** of **$107.9 million**, a decrease from **$1.71 billion** and **$168.4 million** in Q2 2024, respectively, with **total assets** at **$7.02 billion** and **Cash flow from operations** at **-$165.9 million** for the first six months of 2025 | Financial Metric | Three Months Ended May 31, 2025 | Three Months Ended May 31, 2024 | Six Months Ended May 31, 2025 | Six Months Ended May 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | $1,529.6 million | $1,709.8 million | $2,921.4 million | $3,177.6 million | | **Net Income** | $107.9 million | $168.4 million | $217.4 million | $307.1 million | | **Diluted EPS** | $1.50 | $2.15 | $3.00 | $3.91 | | Balance Sheet Item | May 31, 2025 | November 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $308.9 million | $598.0 million | | Inventories | $5,913.3 million | $5,528.0 million | | Total Assets | $7,017.6 million | $6,936.2 million | | Notes Payable | $1,892.9 million | $1,691.7 million | | Total Stockholders' Equity | $3,990.5 million | $4,060.6 million | | Cash Flow Activity (Six Months Ended) | May 31, 2025 | May 31, 2024 | | :--- | :--- | :--- | | Net cash from operating activities | ($165.9 million) | $90.0 million | | Net cash used in investing activities | ($20.4 million) | ($29.0 million) | | Net cash used in financing activities | ($102.0 million) | ($144.1 million) | [Segment Information](index=8&type=section&id=2.%20Segment%20Information) The company operates through four homebuilding segments and one financial services segment, with the **West Coast segment** being the largest contributor to **revenues** (**$1.26 billion**) and **pretax income** (**$145.6 million**) for the six months ended May 31, 2025 | Homebuilding Segment (Six Months Ended May 31) | Revenues 2025 | Revenues 2024 | Pretax Income 2025 | Pretax Income 2024 | | :--- | :--- | :--- | :--- | :--- | | West Coast | $1,261.8 million | $1,256.7 million | $145.6 million | $152.9 million | | Southwest | $627.0 million | $641.8 million | $114.1 million | $110.5 million | | Central | $558.6 million | $696.3 million | $46.2 million | $85.1 million | | Southeast | $464.4 million | $568.4 million | $33.3 million | $70.8 million | - **Inventory impairment** and **land option contract abandonment charges** for the six months ended May 31, 2025, totaled **$7.0 million**, a significant increase from **$2.5 million** in the prior-year period[28](index=28&type=chunk) [Financial Services](index=9&type=section&id=3.%20Financial%20Services) The **financial services segment's pretax income** decreased by **37%** to **$15.7 million** for the six months ended May 31, 2025, compared to **$24.8 million** in the prior year, driven by lower revenues and reduced equity income from the unconsolidated mortgage joint venture (KBHS) | Financial Services (Six Months Ended May 31) | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenues | $9.6 million | $14.4 million | | Equity in income of unconsolidated joint venture | $9.2 million | $13.5 million | | **Pretax Income** | **$15.7 million** | **$24.8 million** | [Inventories](index=11&type=section&id=6.%20Inventories) **Total inventories** increased to **$5.91 billion** as of May 31, 2025, up from **$5.53 billion** at November 30, 2024, primarily due to growth in **land under development** to **$3.80 billion**, with **$55.0 million** of **interest costs** capitalized | Inventory Component | May 31, 2025 | November 30, 2024 | | :--- | :--- | :--- | | Homes completed or under construction | $2,117.7 million | $1,990.1 million | | Land under development | $3,795.7 million | $3,537.9 million | | **Total** | **$5,913.3 million** | **$5,528.0 million** | [Inventory Impairments and Land Option Contract Abandonments](index=11&type=section&id=7.%20Inventory%20Impairments%20and%20Land%20Option%20Contract%20Abandonments) The company recognized no **inventory impairment charges** in the first six months of 2025 or 2024, but **land option contract abandonment charges** significantly increased to **$7.0 million** for the six months ended May 31, 2025, from **$2.5 million** in 2024 - **Land option contract abandonment charges** were **$5.6 million** for Q2 2025 and **$7.0 million** for the six months ended May 31, 2025[41](index=41&type=chunk) - **No inventory impairment charges** were recognized for the three-month and six-month periods ended May 31, 2025 and 2024[39](index=39&type=chunk) [Debt and Financing](index=18&type=section&id=14.%20Notes%20Payable) **Total notes payable** increased to **$1.89 billion** as of May 31, 2025, from **$1.69 billion** at November 30, 2024, primarily due to drawing **$200.0 million** from the **unsecured revolving credit facility**, while remaining in compliance with all **debt covenants** | Debt Instrument | May 31, 2025 | November 30, 2024 | | :--- | :--- | :--- | | Unsecured revolving credit facility | $200.0 million | $0 | | Senior unsecured term loan | $359.2 million | $358.8 million | | Senior notes | $1,330.6 million | $1,329.7 million | | **Total** | **$1,892.9 million** | **$1,691.7 million** | - As of May 31, 2025, the company had **$881.7 million** available for cash borrowings under its **$1.09 billion** credit facility[68](index=68&type=chunk) [Commitments and Contingencies](index=20&type=section&id=16.%20Commitments%20and%20Contingencies) The company faces various commitments and contingencies, including a **warranty liability** of **$97.7 million**, approximately **280 construction defect claims** in Florida, a **subpoena from the U.S. Department of Justice** regarding ENERGY STAR homes, and **Outstanding performance bonds** totaling **$1.44 billion** - The company is addressing approximately **280** outstanding claims in Florida related to Chapter 558, alleging construction defects, primarily concerning stucco and water-intrusion issues[93](index=93&type=chunk) - On October 2, 2023, the company received a **subpoena from the U.S. Department of Justice** regarding the inspection, rating, and marketing of its ENERGY STAR certified homes. The company is cooperating with the government[96](index=96&type=chunk) - As of May 31, 2025, the company had **$1.44 billion** in **outstanding performance bonds** and **$82.7 million** in letters of credit to secure project completions[94](index=94&type=chunk) [Stockholders' Equity](index=23&type=section&id=18.%20Stockholders'%20Equity) During the first half of 2025, the company **repurchased** **4.5 million shares** of its **common stock** for **$250.0 million**, with **$450.0 million** remaining available under the current **share repurchase authorization**, and paid a **quarterly cash dividend** of **$0.25 per share** in Q2 2025 - In the first half of 2025, the company **repurchased** **4,488,614 shares** for **$250.0 million**. **$450.0 million** remains authorized for future repurchases as of May 31, 2025[100](index=100&type=chunk) - A **quarterly cash dividend** of **$0.25 per share** was declared and paid in the second quarter of 2025[102](index=102&type=chunk) [Management's Discussion and Analysis (MD&A)](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reported that **market conditions softened** in Q2 2025 due to housing affordability concerns and elevated mortgage rates, leading to a **13%** year-over-year decline in **net orders**, prompting a **new pricing strategy** and a downward revision of **full-year 2025 guidance** for **housing revenues** to between **$6.30 billion** and **$6.50 billion** [Overview of Operations](index=25&type=section&id=OVERVIEW) In Q2 2025, the company faced a softer market with subdued demand, resulting in **net orders** falling **13%** year-over-year to **3,460**, a **10%** decrease in Q2 **housing revenues** to **$1.52 billion**, and **diluted EPS** falling **30%** to **$1.50** - **Market conditions softened** in Q2 2025 due to housing affordability concerns, elevated mortgage rates, and weakening consumer confidence[106](index=106&type=chunk) - **Net orders** for Q2 2025 were down **13%** year-over-year to **3,460**, with a monthly net order pace per community of **4.5**, compared to **5.5** in the prior year[107](index=107&type=chunk) - A **new pricing strategy** was implemented, reducing selling prices and other homebuyer concessions to stimulate demand. This led to an **8%** decrease in the **average selling price** of **net orders** for the quarter[108](index=108&type=chunk) [Homebuilding Operations Analysis](index=26&type=section&id=HOMEBUILDING) **Homebuilding revenues** for Q2 2025 fell **10%** to **$1.52 billion**, driven by an **11%** decrease in homes delivered, with **Operating income** dropping **30%** to **$131.5 million**, and **housing gross profit margin** contracting by **180 basis points** to **19.3%**, while **ending backlog value** was down **27%** year-over-year to **$2.29 billion** | Metric (Q2) | 2025 | 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Homes Delivered | 3,120 | 3,523 | -11% | | Housing Gross Profit Margin | 19.3% | 21.1% | -180 bps | | Adjusted Housing Gross Profit Margin | 19.7% | 21.2% | -150 bps | | SG&A as % of Housing Revenues | 10.7% | 10.1% | +60 bps | | Metric (Q2) | 2025 | 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Net Orders | 3,460 | 3,997 | -13% | | Net Order Value | $1.61 billion | $2.03 billion | -21% | | Cancellation Rate | 16% | 13% | +3 p.p. | | Ending Backlog Value | $2.29 billion | $3.12 billion | -27% | [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) The company ended Q2 2025 with **$1.19 billion** in **total liquidity**, including **$308.9 million** in cash and **$881.7 million** available on its credit facility, shifting capital allocation towards **share repurchases** (**$250.0 million** in H1 2025) and scaling back **land and development investments**, resulting in a **debt-to-capital ratio** increase to **32.2%** - **Total liquidity** was **$1.19 billion** at the end of Q2 2025, consisting of cash and available credit facility capacity[159](index=159&type=chunk) - The company is scaling back **land and development investments** (down **23%** YoY in Q2) while increasing **share repurchases** (**$250.0 million** in H1 2025)[111](index=111&type=chunk)[163](index=163&type=chunk) - The **debt-to-capital ratio** increased to **32.2%** at May 31, 2025, from **29.4%** at November 30, 2024, due to **$200.0 million** in borrowings under the credit facility[169](index=169&type=chunk) - **Net cash used in operating activities** was **$165.9 million** for the first six months of 2025, a reversal from **$90.0 million** provided in the prior year, mainly due to a **$390.6 million** increase in inventories[182](index=182&type=chunk) [Outlook](index=43&type=section&id=Outlook) Due to persistent soft market conditions, KB Home has revised its **2025 full-year guidance** downwards, expecting **housing revenues** between **$6.30 billion** and **$6.50 billion**, with an **average selling price** of **$480,000** to **$490,000**, and a **housing gross profit margin** of **19.0%** to **19.4%** | 2025 Full Year Guidance | Revised Projection | Prior Year (2024) | | :--- | :--- | :--- | | Housing Revenues | $6.30 billion - $6.50 billion | $6.90 billion | | Average Selling Price | $480,000 - $490,000 | $486,900 | | Housing Gross Profit Margin | 19.0% - 19.4% | 21.1% | | Ending Community Count | Approx. 250 | 258 | | Q3 2025 Guidance | Projection | Prior Year (Q3 2024) | | :--- | :--- | :--- | | Housing Revenues | $1.50 billion - $1.70 billion | $1.75 billion | | Average Selling Price | $470,000 - $480,000 | $480,900 | | Housing Gross Profit Margin | 18.1% - 18.7% | 20.7% | - The company expects to repurchase between **$100.0 million** and **$200.0 million** of its **common stock** in the **third quarter** of 2025[202](index=202&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes in its **market risk profile** since November 30, 2024, except for increased **interest rate risk exposure** due to **$200.0 million** in cash borrowings outstanding under its **variable-rate** Credit Facility as of May 31, 2025 - The **primary change in market risk** is related to the **$200.0 million** of **variable-rate debt** drawn from the Credit Facility, which is subject to interest rate fluctuations based on SOFR[213](index=213&type=chunk) [Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's **disclosure controls and procedures** and concluded they were effective as of May 31, 2025, with no material changes in **internal control over financial reporting** during the quarter - The Principal Executive Officer and Principal Financial Officer concluded that the company's **disclosure controls and procedures were effective** as of May 31, 2025[216](index=216&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings & Risk Factors](index=47&type=section&id=Item%201.%20Legal%20Proceedings%20%26%20Item%201A.%20Risk%20Factors) The company refers to Note 17 of the financial statements for details on **legal proceedings**, and reports **no material changes to risk factors** previously disclosed in the Annual Report on Form 10-K for the year ended November 30, 2024 - For **legal proceedings**, the report refers to Note 17 in the financial statements[217](index=217&type=chunk) - **No material changes to risk factors** were reported since the last Annual Report[218](index=218&type=chunk) [Share Repurchases](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2025, KB Home **repurchased** **3,734,675 shares** of its **common stock** for a **Total Cost** of **$200.0 million**, with **$450.0 million** remaining available under its **board-authorized share repurchase program** as of May 31, 2025 | Period (2025) | Total Shares Purchased | Average Price Paid per Share | Total Cost | | :--- | :--- | :--- | :--- | | March | 0 | N/A | $0 | | April | 2,072,237 | $52.56 | $108.9 million | | May | 1,662,438 | $54.79 | $91.1 million | | **Q2 Total** | **3,734,675** | **$53.55** | **$200.0 million** | - As of May 31, 2025, **$450.0 million** remained available for repurchase under the existing authorization[219](index=219&type=chunk)