KB Home Q1 Earnings Meet Estimates, Revenues Miss, Both Down Y/Y

Core Insights - KB Home reported first-quarter fiscal 2026 results with earnings in line with estimates but total revenues missing expectations, both metrics showing a year-over-year decline [1][5]. Financial Performance - Adjusted earnings were 52 cents per share, matching the Zacks Consensus Estimate, while total revenues were $1.08 billion, missing the consensus mark of $1.1 billion by 2% and decreasing 22.6% year over year [5]. - Homebuilding segment revenues were $1.07 billion, down 22.7% from $1.39 billion in the prior year, with home deliveries at 2,370 units, a 14% decline from 2,770 units [6]. - The average selling price (ASP) for homes decreased by 9.7% year over year to $452,100 [6]. Orders and Backlog - Net orders increased by 3% year over year to 2,846 units, with the value of net orders rising to $1.36 billion from $1.35 billion in the previous year [7]. - The cancellation rate was 12%, down from 16% in the year-ago period, indicating a stronger buyer base [7]. - The backlog at quarter-end totaled 3,604 homes, down from 4,436 homes a year ago, with potential housing revenues from the backlog declining 22.7% to $1.7 billion [8]. Margins and Expenses - Housing gross margin contracted by 480 basis points year over year to 15.5%, driven by pricing reductions and higher land costs [9]. - Selling, general and administrative expenses (SG&A) as a percentage of housing revenues increased by 120 basis points to 12.2% [10]. - Homebuilding operating margin fell to 3.1% from 9.2% in the prior year [10]. Financial Position - As of February 28, 2026, KB Home had cash and cash equivalents of $200.5 million, down from $228.6 million at the end of fiscal 2025, with total liquidity of $1.2 billion [12]. - The debt-to-capital ratio increased to 32.9% from 30.3% at the end of fiscal 2025 [12]. Future Guidance - For Q2 fiscal 2026, KB Home expects housing revenues between $1.05 billion and $1.15 billion, down from $1.52 billion in the year-ago period, with deliveries projected between 2,250 and 2,450 homes [14]. - Fiscal 2026 delivery expectations have been revised to 10,000 to 11,500 homes, down from 11,000 to 12,500 homes, with housing revenues expected to be between $4.8 billion and $5.5 billion [16].