KB Home(KBH) - 2025 Q3 - Quarterly Results

Executive Summary & CEO Commentary KB Home reported strong Q3 2025 financial results, exceeding guidance with $1.62 billion in revenue and $1.61 diluted EPS, alongside significant capital returns and operational improvements Third Quarter 2025 Highlights KB Home reported solid financial results for the third quarter ended August 31, 2025, meeting or exceeding guidance across key metrics, with revenues totaling $1.62 billion and diluted earnings per share of $1.61, alongside $188.5 million in common stock repurchases Third Quarter 2025 Highlights | Metric | Q3 2025 | Q3 2024 | | :----- | :------ | :------ | | Revenues (Billions USD) | 1.62 | 1.75 | | Diluted EPS (USD) | 1.61 | 2.04 | | Common Stock Repurchased (Millions USD) | 188.5 | - | CEO Commentary Jeffrey Mezger, Chairman and CEO, highlighted outstanding operational execution, including reduced build times and costs, a consistent sales approach, improving affordability, and a healthy balance sheet supporting future growth and substantial capital returns to stockholders, totaling over $490 million in the first nine months - Achieved solid financial results, meeting or exceeding guidance ranges across key metrics[3] - Outstanding operational execution, making meaningful progress in reducing both build times and costs[3] - Returned more than $490 million to stockholders in the first nine months of the fiscal year through share repurchases and dividends, representing approximately 11% of shares outstanding[3] Financial Performance Overview The company's financial performance for Q3 and YTD 2025 showed decreased revenues and net income, with declining margins across homebuilding and financial services Three Months Ended August 31, 2025 For the third quarter, KB Home experienced a decrease in revenues and net income compared to the prior year, with homebuilding operating income and gross profit margins declining due to price reductions, higher relative land costs, and geographic mix, partly offset by lower construction costs, while financial services pretax income also decreased Consolidated Financial Highlights (Three Months Ended August 31) | Metric | 2025 | 2024 | Change (YoY) | | :----- | :--- | :--- | :----------- | | Total Revenues (Millions USD) | 1,620.5 | 1,752.6 | -7.5% | | Net Income (Millions USD) | 109.8 | 157.3 | -30.2% | | Diluted EPS (USD) | 1.61 | 2.04 | -21.1% | | Effective Tax Rate (%) | 23.3% | 24.2% | -0.9 pp | Homebuilding Operating Performance (Three Months Ended August 31) | Metric | 2025 | 2024 | Change (YoY) | | :----- | :--- | :--- | :----------- | | Homebuilding Operating Income (Millions USD) | 131.2 | 189.0 | -30.6% | | Homebuilding Operating Income Margin (%) | 8.1% | 10.8% | -2.7 pp | | Adjusted Homebuilding Operating Income Margin (excl. inventory charges) (%) | 8.8% | 10.9% | -2.1 pp | | Housing Gross Profit Margin (%) | 18.2% | 20.6% | -2.4 pp | | Adjusted Housing Gross Profit Margin (excl. inventory charges) (%) | 18.9% | 20.7% | -1.8 pp | | SG&A as % of Housing Revenues (%) | 10.0% | 9.8% | +0.2 pp | Financial Services Pretax Income (Three Months Ended August 31) | Metric | 2025 | 2024 | Change (YoY) | | :----- | :--- | :--- | :----------- | | Financial Services Pretax Income (Millions USD) | 8.7 | 11.0 | -21.0% | Nine Months Ended August 31, 2025 For the first nine months of fiscal 2025, total revenues decreased to $4.54 billion, and net income fell to $327.3 million, resulting in a 23% decline in diluted earnings per share, with homes delivered also down 9% year-over-year, while the average selling price increased Consolidated Financial Highlights (Nine Months Ended August 31) | Metric | 2025 | 2024 | Change (YoY) | | :----- | :--- | :--- | :----------- | | Total Revenues (Billions USD) | 4.54 | 4.93 | -7.9% | | Net Income (Millions USD) | 327.3 | 464.4 | -29.5% | | Diluted EPS (USD) | 4.60 | 5.94 | -22.6% | | Homes Delivered | 9,283 | 10,191 | -9.0% | | Average Selling Price (USD) | 487,500 | 481,400 | +1.3% | Operational Metrics Key operational metrics for Q3 2025 indicate a decrease in net orders and backlog, mixed regional performance in homes delivered and average selling prices, and a slight increase in community count Net Orders and Backlog Net orders for the third quarter decreased by 4% year-over-year, with monthly net orders per community also declining, and the cancellation rate increased to 17%, while the ending backlog in both homes and value saw significant reductions compared to the prior year Net Orders and Backlog (Three Months Ended August 31) | Metric | 2025 | 2024 | Change (YoY) | | :----- | :--- | :--- | :----------- | | Net Orders | 2,950 | 3,085 | -4.4% | | Monthly Net Orders per Community | 3.8 | 4.1 | -7.3% | | Cancellation Rate (% of gross orders) (%) | 17% | 15% | +2.0 pp | | Ending Backlog Homes | 4,333 | 5,724 | -24.3% | | Ending Backlog Value (Billions USD) | 1.99 | 2.92 | -31.9% | Homes Delivered and Average Selling Price by Region Homes delivered decreased by 7% in Q3 2025, with regional variations including declines in the West Coast and Central regions, an increase in the Southeast, and flat performance in the Southwest, while average selling prices showed mixed trends across regions Homes Delivered by Region (Three Months Ended August 31) | Region | 2025 | 2024 | Change (YoY) | | :----- | :--- | :--- | :----------- | | West Coast | 972 | 1,150 | -15.5% | | Southwest | 681 | 681 | 0.0% | | Central | 943 | 1,073 | -12.1% | | Southeast | 797 | 727 | +9.6% | | Total | 3,393 | 3,631 | -6.6% | Average Selling Price by Region (Three Months Ended August 31) | Region | 2025 | 2024 | Change (YoY) | | :----- | :--- | :--- | :----------- | | West Coast (USD) | 684,000 | 661,400 | +3.4% | | Southwest (USD) | 492,700 | 459,300 | +7.3% | | Central (USD) | 329,400 | 347,500 | -5.3% | | Southeast (USD) | 380,200 | 412,200 | -7.7% | | Total (USD) | 475,700 | 480,900 | -1.1% | Community Count The average community count for the third quarter increased by 3% to 259, and the ending community count rose by 4% to 264, indicating a slight expansion in the company's operational footprint Community Count (Q3 2025 vs. Q3 2024) | Metric | 2025 | 2024 | Change (YoY) | | :----- | :--- | :--- | :----------- | | Average Community Count | 259 | 251 | +3.2% | | Ending Community Count | 264 | 254 | +3.9% | Balance Sheet and Capital Management The company's balance sheet reflects increased inventories, decreased land investments, and a higher debt-to-capital ratio, while capital management includes significant share repurchases Key Balance Sheet Items As of August 31, 2025, inventories increased by 6% from November 30, 2024, and 3% year-over-year, while investments in land and land development decreased, and the total lot portfolio declined by 15% from year-end 2024 and 6% year-over-year, with stockholders' equity decreasing primarily due to common stock repurchases and cash dividends Key Balance Sheet Items (as of August 31, 2025) | Metric | August 31, 2025 | November 30, 2024 | Change (vs. Nov 30, 2024) | | :----- | :-------------- | :---------------- | :------------------------ | | Inventories (Billions USD) | 5.84 | 5.53 | +5.6% | | Investments in Land & Land Development (Billions USD) | 1.95 | 2.10 | -7.1% | | Lots Owned or Under Contract | 65,251 | 76,750 | -15.0% | | Stockholders' Equity (Billions USD) | 3.90 | 4.06 | -3.9% | | Book Value per Share (USD) | 60.25 | - | +11% (YoY) | Liquidity and Debt KB Home maintained total liquidity of $1.16 billion, comprising cash and available credit, while notes payable increased, leading to a higher debt to capital ratio compared to the end of the previous fiscal year Liquidity and Debt (as of August 31, 2025) | Metric | August 31, 2025 | November 30, 2024 | Change (vs. Nov 30, 2024) | | :----- | :-------------- | :---------------- | :------------------------ | | Total Liquidity (Billions USD) | 1.16 | - | - | | Cash and Cash Equivalents (Millions USD) | 330.6 | 598.0 | -44.8% | | Available Revolving Credit Facility (Millions USD) | 831.7 | - | - | | Notes Payable (Billions USD) | 1.94 | 1.69 | +14.8% | | Debt to Capital Ratio (%) | 33.2% | 29.4% | +3.8 pp | Shareholder Returns The company continued its commitment to shareholder returns, repurchasing $188.5 million of common stock in Q3 2025 and a total of $438.5 million in the first nine months of the fiscal year, contributing to over $490 million returned to stockholders, including dividends Common Stock Repurchases | Period | Shares Repurchased | Cost (Millions USD) | Average Price per Share (USD) | | :----- | :----------------- | :------------------ | :---------------------------- | | Q3 2025 | 3.3 million | 188.5 | 57.12 | | 9 Months Ended Aug 31, 2025 | 7.8 million | 438.5 | 56.30 | - As of August 31, 2025, the Company had $261.5 million remaining under its current common stock repurchase authorization[13] Financial Guidance KB Home provided its full year 2025 outlook, projecting housing revenues between $6.10 billion and $6.20 billion with anticipated operating income and gross profit margins Full Year 2025 Outlook KB Home provided guidance for its 2025 full year, projecting housing revenues between $6.10 billion and $6.20 billion, with an average selling price of approximately $483,000, and anticipates a homebuilding operating income margin of about 8.9% and a housing gross profit margin between 19.2% and 19.3%, assuming no inventory-related charges Full Year 2025 Guidance | Metric | Guidance | | :----- | :------- | | Housing Revenues (Billions USD) | $6.10 to $6.20 | | Average Selling Price (USD) | ~$483,000 | | Homebuilding Operating Income as % of Revenues (excl. inventory charges) (%) | ~8.9% | | Housing Gross Profit Margin (excl. inventory charges) (%) | 19.2% to 19.3% | | SG&A as % of Housing Revenues (%) | 10.2% to 10.3% | | Effective Tax Rate (%) | ~23% | | Ending Community Count | ~260 | Supplemental Financial Data This section provides detailed consolidated statements of operations and balance sheets, along with supplemental homebuilding information and non-GAAP financial measure reconciliations Consolidated Statements of Operations The consolidated statements of operations provide detailed financial performance for the three and nine months ended August 31, 2025 and 2024, covering total revenues, homebuilding and financial services segment results, pretax income, income tax expense, net income, and earnings per share | | Three Months Ended August 31, | | Nine Months Ended August 31, | | :--- | :--- | :--- | :--- | :--- | | | 2025 | 2024 | 2025 | 2024 | | Total revenues (Thousands USD) | 1,620,474 | 1,752,608 | 4,541,836 | 4,930,187 | | Homebuilding operating income (Thousands USD) | 131,163 | 188,950 | 389,965 | 534,809 | | Financial services pretax income (Thousands USD) | 8,686 | 10,953 | 24,373 | 35,793 | | Total pretax income (Thousands USD) | 143,228 | 207,429 | 424,968 | 603,213 | | Net income (Thousands USD) | 109,828 | 157,329 | 327,268 | 464,413 | | Diluted EPS (USD) | 1.61 | 2.04 | 4.60 | 5.94 | | Diluted Weighted Average Shares Outstanding | 67,737 | 76,630 | 70,643 | 77,565 | Consolidated Balance Sheets The consolidated balance sheets present the company's financial position as of August 31, 2025, and November 30, 2024, detailing assets, liabilities, and stockholders' equity for both homebuilding and financial services segments | | August 31, 2025 | November 30, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents (Thousands USD) | 330,586 | 597,973 | | Inventories (Thousands USD) | 5,838,816 | 5,528,020 | | Total assets (Thousands USD) | 6,985,572 | 6,936,169 | | Liabilities and stockholders' equity | | | | Notes payable (Thousands USD) | 1,943,582 | 1,691,679 | | Stockholders' equity (Thousands USD) | 3,902,363 | 4,060,616 | | Total liabilities and stockholders' equity (Thousands USD) | 6,985,572 | 6,936,169 | Homebuilding Supplemental Information This section provides additional details on homebuilding revenues, costs, and operational metrics, including regional breakdowns for homes delivered, net orders, net order value, and backlog data for the three and nine months ended August 31, 2025 and 2024 Homebuilding Revenues (Three Months Ended August 31) | Metric | 2025 | 2024 | | :----- | :--- | :--- | | Housing Revenues (Thousands USD) | 1,613,975 | 1,745,979 | | Land Revenues (Thousands USD) | 487 | — | | Total Homebuilding Revenues (Thousands USD) | 1,614,462 | 1,745,979 | Homebuilding Costs and Expenses (Three Months Ended August 31) | Metric | 2025 | 2024 | | :----- | :--- | :--- | | Construction and Land Costs (Housing) (Thousands USD) | 1,320,611 | 1,385,563 | | Selling, General and Administrative Expenses (Thousands USD) | 162,152 | 171,466 | | Total Homebuilding Costs and Expenses (Thousands USD) | 1,483,299 | 1,557,029 | Regional Net Orders (Three Months Ended August 31) | Region | 2025 | 2024 | Change (YoY) | | :----- | :--- | :--- | :----------- | | West Coast | 870 | 958 | -9.2% | | Southwest | 459 | 616 | -25.4% | | Central | 795 | 871 | -8.8% | | Southeast | 826 | 640 | +29.1% | | Total | 2,950 | 3,085 | -4.4% | Non-GAAP Financial Measures Reconciliation This section provides a reconciliation of the company's housing gross profit margin (GAAP) to its adjusted housing gross profit margin (non-GAAP), with the adjusted measure excluding inventory impairment and land option contract abandonment charges to offer a clearer view of profitability and enable comparisons Adjusted Housing Gross Profit Margin Reconciliation (Three Months Ended August 31) | Metric | 2025 | 2024 | | :----- | :--- | :--- | | Housing Gross Profits (GAAP) (Thousands USD) | 293,364 | 360,416 | | Add: Inventory-related charges (Thousands USD) | 11,338 | 1,177 | | Adjusted Housing Gross Profits (Thousands USD) | 304,702 | 361,593 | | Housing Gross Profit Margin (GAAP) (%) | 18.2% | 20.6% | | Adjusted Housing Gross Profit Margin (Non-GAAP) (%) | 18.9% | 20.7% | - Adjusted housing gross profit margin is a non-GAAP measure that isolates the impact of housing inventory impairment and land option contract abandonment charges, providing a more comparable profitability metric for investors[27] Corporate Information This section provides an overview of KB Home, details on the Q3 2025 earnings conference call, and important forward-looking and cautionary statements About KB Home KB Home is a leading US homebuilder operating in 49 markets, known for building nearly 700,000 quality homes over 65 years, emphasizing personalized homebuying experiences, affordability, and sustainability as a leader in ENERGY STAR certified homes - One of the largest and most trusted homebuilders in the United States, operating in 49 markets[11] - Built nearly 700,000 quality homes in over 65 years and ranked 1 customer-ranked national homebuilder[11] - Industry leader in sustainability, achieving high residential energy-efficiency ratings and delivering more ENERGY STAR certified homes than any other builder[11] Conference Call A conference call to discuss the 2025 third quarter earnings was scheduled for September 24, 2025, at 2:00 p.m. Pacific Time, with details available on the company's investor relations website - Conference call to discuss 2025 third quarter earnings broadcast live on September 24, 2025, at 2:00 p.m. Pacific Time[10] Forward-Looking and Cautionary Statements This section contains important disclosures regarding forward-looking statements, highlighting that actual events and results may differ materially from forecasts due to various risk factors, including general economic conditions, capital market conditions, material and trade costs, interest rate changes, and government policies - Statements in the press release that are predictive in nature or concern future market and economic conditions, business prospects, or financial performance are 'forward-looking statements' under the Private Securities Litigation Reform Act of 1995[12] - Actual events and results may differ materially from forward-looking statements due to factors such as general economic conditions, capital market conditions, material and trade costs, changes in interest rates, and government actions affecting the housing market[12][14] - The company does not have a specific policy or intent of updating or revising forward-looking statements[12]