KB Home(US:KBH)2023-10-06 21:00Financial Performance - Homebuilding revenues for Q3 2023 were $1,579,719, down 14% from $1,838,888 in Q3 2022, with a total revenue decline of 14% year-over-year[102]. - Net income for Q3 2023 was $149,933, a decrease of 41% from $255,329 in Q3 2022, with diluted earnings per share falling 37% to $1.80[102]. - Homebuilding operating income for Q3 2023 was $179.2 million, down 45% year-over-year, with an operating income margin of 11.3%, compared to 17.7% in Q3 2022[112]. - Operating income for the nine months ended August 31, 2023 decreased by 29% year-over-year to $10.2 million, with an operating income margin of 11.4%, down 390 basis points from the previous year[113]. - Housing gross profits for the three months ended August 31, 2023 were $338.2 million, a decline of 31% from $490.9 million in the same period last year, with a gross profit margin of 21.5%, down 520 basis points year-over-year[113]. - Operating income for the third quarter of 2023 decreased by 4% to $38,495,000, while it increased by 11% to $110,806,000 for the nine months ended August 31, 2023[138]. - The company achieved net income of $411.975 million for the nine months ended August 31, 2023, compared to $600.3 million in the same period of 2022[188]. - The company reported a total revenue of $4.45 billion for the nine months ended August 31, 2023, with construction and land costs amounting to $3.49 billion[188]. Orders and Backlog - Net orders increased by 52% year-over-year in Q3 2023, driven by a 9% increase in average community count and a higher monthly net order pace of 4.3, up from 3.1 a year ago[102]. - Net orders for the third quarter of 2023 increased by 52% year-over-year to 3,097, with a net order value of $1.51 billion, reflecting a 54% increase from the previous year[122]. - The cancellation rate for net orders improved to 21% in the third quarter of 2023, down from 35% in the same quarter of 2022[122]. - The ending backlog value at August 31, 2023, decreased 35% year-over-year to approximately $3.40 billion, influenced by a slowdown in housing market demand[108]. - Ending backlog of homes as of August 31, 2023 was 7,008, a decrease of 35% from 10,756 homes a year earlier, with a backlog value of $3.40 billion[124]. - Total backlog of homes decreased by 35% year-over-year to 7,008 homes, with a total backlog value of $3.4 billion, also down 35% from the previous year[127]. - The backlog value stood at $3.40 billion as of August 31, 2023, supporting projected results for 2023[199]. - Net orders are expected to range between 2,070 and 2,760[202]. Selling Prices and Market Conditions - The average selling price of homes delivered in Q3 2023 was $466,300, down 8% from $508,700 in Q3 2022, reflecting a shift in product and geographic mix[110]. - The average selling price of homes in the third quarter of 2023 increased by 2% to $488,300 compared to the previous year[122]. - The company anticipates a year-over-year decrease in the average selling price of homes delivered in Q4 2023 due to pricing adjustments and homebuyer concessions[103]. - The average selling price is anticipated to be approximately $481,000, down from $500,800 in 2022[207]. - The average selling price of homes increased by 4% to $389,200 in the third quarter and by 9% to $394,100 for the nine months ended August 31, 2023[138]. Liquidity and Investments - Total liquidity at the end of Q3 2023 was $1.70 billion, including cash and cash equivalents and $1.08 billion of available capacity under the Credit Facility[107]. - The company had $1.32 billion in performance bonds outstanding as of August 31, 2023, compared to $1.27 billion a year earlier[166]. - The Credit Facility available for cash borrowings was $1.083 billion as of August 31, 2023, compared to $933 million on November 30, 2022[167]. - The consolidated tangible net worth was $3.79 billion as of August 31, 2023, exceeding the required minimum of $2.72 billion[170]. - The company reported net cash provided by operating activities of $772.5 million, a significant increase from a net cash used of $(224.0) million in the same period of 2022[176]. - The ratio of debt to capital improved to 30.6% as of August 31, 2023, compared to 33.4% on November 30, 2022[164]. - Investments in land and land development increased to $554.5 million in Q3 2023, up 40% from Q2 2023, reflecting a strategic response to improved market conditions[107]. - The company abandoned 8,097 previously controlled lots in the nine months ended August 31, 2023, reflecting a strategic pivot in land investment[160]. - Land acquisition expenditures fell by 57% to $329.5 million from $759.2 million in the same period[157]. - In Q3 2023, investments in land and land development increased by 40% sequentially from Q2 2023, with land acquisition expenditures more than doubling[157]. Segment Performance - West Coast segment revenues fell by 39% to $506.8 million for the three months ended August 31, 2023, and by 28% to $1.6 billion for the nine months[131]. - Operating income for the West Coast segment dropped 68% to $55.1 million in Q3 2023, and 59% to $170.9 million for the nine months[132]. - Southwest segment revenues decreased by 5% to $306.3 million in Q3 2023, while nine-month revenues increased by 7% to $881.7 million[134]. - Central segment revenues increased by 14% to $506.6 million for Q3 2023, and by 17% to $1.4 billion for the nine months[136]. - The Central segment's operating income as a percentage of revenues decreased by 300 basis points to 14.9% in Q3 2023[136]. - Corporate and other segment reported operating losses of $36.0 million in Q3 2023, down from $42.9 million in Q3 2022[129]. - Revenues for the Southeast segment increased by 7% year-over-year to $259,993,000 for the three months ended August 31, 2023, and by 21% to $781,427,000 for the nine months ended August 31, 2023[138]. Future Outlook - The company anticipates ongoing challenges from elevated mortgage interest rates and macroeconomic uncertainty affecting consumer demand for homes[204]. - The company plans to increase land acquisition activity in the fourth quarter of 2023, contingent on market conditions and investment return standards[197]. - Housing revenues are expected to be in the range of $6.50 billion to $7.00 billion, an 8% decrease from $6.88 billion in 2022[207]. - Homebuilding operating income margin is expected to be about 11.3%, compared to 15.6% for 2022[207]. - Housing gross profit margin is projected to be approximately 21.3%, down from 24.8% in 2022[207]. - Selling, general and administrative expenses as a percentage of housing revenues are expected to be about 10.0%, compared to 9.2% in the prior year[207]. - The effective tax rate is expected to be approximately 23%, compared to approximately 24% for 2022[207]. - The ending community count is expected to be approximately flat sequentially, with an average community count up about 9% year over year, totaling around 230[203][207].