KB Home(US:KBH)2019-01-24 21:54Financial Performance and Goals - The company aims for housing revenues greater than $5.0 billion in 2019[24] - The target for homebuilding operating income margin, excluding inventory-related charges, is set at 8.0% to 9.0%[24] - The company has implemented a Returns-Focused Growth Plan aimed at improving return on invested capital to exceed 10.0%[24] Land and Inventory Management - The company reported a decrease in land held for future development from 11% in 2017 to 7% in 2018, with a goal to reduce it to less than 4% by the end of 2019[21] - As of November 30, 2018, the total inventory lots owned or controlled by the company increased to 53,627, up from 46,371 in 2017, representing a growth of approximately 15.5%[40] - The company focuses on acquiring entitled land parcels in metropolitan areas with a potential for at least 800 homes delivered per year[16] Customer Engagement and Satisfaction - Approximately 75% of annual deliveries have been to first-time and first move-up homebuyers, with 74% in 2018[28] - The Built-to-Order™ homebuying process enhances customer satisfaction by allowing personalized design choices[15] Operational Efficiency - The company plans to continue improving asset efficiency by calibrating home sales rates and controlling direct construction costs[20] - The operational structure allows division management teams considerable autonomy to identify land acquisition opportunities and develop communities[32] - The company’s construction cycle time from home sale to delivery is typically five to six months, indicating a streamlined operational process[42] Employee Growth - The company employed approximately 2,005 full-time employees as of December 31, 2018, an increase from 1,915 in 2017, reflecting growth in operational capacity[47] Sustainability and Innovation - The company built its 115,000th ENERGY STAR® certified home in 2018, showcasing its commitment to sustainability and energy efficiency[54] - The company has implemented advanced home automation technologies in partnership with Google®, enhancing the smart home experience for buyers[54] - In 2018, the company received the ENERGY STAR Partner of the Year — Sustained Excellence Award for the eighth consecutive year, highlighting its leadership in energy efficiency[55] Market Conditions and Challenges - The company expects upward cost trends for land and raw materials to continue in 2019 due to increased competition and market activity[48] - The geographic mix of markets significantly affects the company's results, with variations in homebuyer preferences and local demographics impacting sales[50] - The company has established national and regional purchasing programs to benefit from bulk purchase discounts, although it has faced higher prices for certain raw materials in recent years[44] Debt and Financial Obligations - The company has long-term fixed rate debt obligations totaling $2,030,000 as of November 30, 2018, with a fair value of $2,082,863[305] - The weighted average effective interest rate for the company's long-term fixed rate debt is 6.6%[305] - The company does not use interest rate derivative instruments to manage exposure to changes in interest rates[304] - The company is subject to interest rate risk on its senior notes, which may affect the fair value of the debt instruments[304] - The company’s debt obligations primarily support general corporate purposes, including subsidiary operations[304] Investor Relations - The company intends to provide annual and quarterly reports free of charge through its investor relations website[58] - The company’s investor relations website serves as the primary location for financial and operational performance announcements[58] - The company has not disclosed any significant joint venture activities that would constitute a significant subsidiary[307]