KBH Q3 Earnings & Revenues Beat Estimates, Both Decline Y/Y, Stock Up

Core Insights - KB Home (KBH) reported third-quarter fiscal 2025 results with earnings and total revenues exceeding Zacks Consensus Estimates but showing a year-over-year decline [1][4][9] Financial Performance - Adjusted earnings per share (EPS) for the quarter were $1.61, beating the consensus estimate of $1.50 by 7.3%, down from $2.04 in the same quarter last year [4][9] - Total revenues reached $1.62 billion, surpassing the consensus mark of $1.6 billion by 1.5%, but decreased by 7.4% year over year [4][9] Market Challenges - The company faces ongoing challenges in a difficult housing market, including pricing pressures and macroeconomic headwinds such as cost inflation and tariffs on construction materials [2][3] - Net orders fell by 4.4% year over year to 2,950 units, with the value of net orders declining to $1.31 billion from $1.54 billion in the previous year [6][9] Operational Adjustments - In response to weaker demand, management revised fiscal 2025 housing revenue guidance downward to a range of $6.1 billion to $6.2 billion, down from previous expectations of $6.3 billion to $6.5 billion [2][13] - The average selling price (ASP) is now estimated at approximately $483,000, compared to the previous range of $480,000 to $490,000 [13] Segment Performance - Homebuilding segment revenues were $1.61 billion, a decline of 7.6% from $1.75 billion in the prior year, with homes delivered decreasing by 6.6% to 3,393 units [5][9] - The housing gross margin contracted by 180 basis points year over year to 18.9%, primarily due to pricing reductions and higher land costs [8][9] Financial Position - As of August 31, 2025, KB Home had cash and cash equivalents of $330.6 million, down from $598 million at the end of fiscal 2024, with total liquidity of $1.16 billion [11] - The debt-to-capital ratio increased to 33.2 from 29.4 at the end of fiscal 2024 [11] Shareholder Returns - The company repurchased approximately 7.8 million shares for $438.5 million, with $261.5 million remaining under the repurchase authorization as of August 31, 2025 [12]