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KB Home's Q4 Earnings & Revenues Beat Estimates, Stock Up
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KB Home (KBH - Free Report) reported impressive fiscal fourth-quarter 2024 results, wherein both revenues and earnings surpassed expectations. On a year-over-year basis, both metrics increased, highlighting its resilience in a fluctuating housing market.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Shares of this leading homebuilder jumped 10.9% in the after-market trading session yesterday. Investors’ sentiments might have been boosted by the company’s results that underscore the effectiveness of KB Home's strategy, driven by faster build times and a strong appetite for homeownership despite mortgage rate pressures. While challenges remain, its strong order book and expanded community count suggest a solid growth trajectory for 2025.
KB Home is optimistic about 2025. However, challenges such as mortgage rate headwinds and potential regulatory shifts could temper the pace of growth. Still, the company’s robust investments in land and its “Built to Order” model provide a cushion against market uncertainties.
KBH reported adjusted earnings per share (EPS) of $2.52, beating the Zacks Consensus Estimate of $2.45 by 2.9% and increasing 36.2% from the year-ago level. Total revenues of $2 billion topped the consensus mark of $1.99 billion by 0.4% and increased 19.5% on a year-over-year basis.
Segment Details of KBH’s Quarterly Release
Homebuilding: The segment's revenues of $1.993 billion grew 19.7% from the prior-year quarter’s level. The number of homes delivered was 3,978 units, up 17% from the year-ago period’s level. The reported figure was better than our projection of 3,850 units for the quarter. The average selling price, or ASP, also increased 3% from a year ago to $501,000. Our model had predicted ASP to be $511,600 for the fiscal fourth quarter. Notably, build times were reduced by 28% year over year, enabling faster backlog turnover and improved customer satisfaction.
Net orders grew by a significant 41% to 2,688 units from the prior year. The value of net orders was also up 41% from the year-ago quarter to $1.32 billion. We projected orders to be 3,008 units or $1.51 billion for the fiscal fourth quarter. Absorption or monthly net orders per community increased to 3.5 from 2.7.
The cancelation rate, as a percentage of gross orders, was 17% compared with 28% in the year-ago period.
The quarter-end backlog totaled 4,434 homes, down from the year-ago figure of 5,510 units. Further, potential housing revenues from the backlog declined 16% from the prior-year period to $2.24 billion.
The average community count was up 8% to 256, and the ending community count rose 7% year over year to 258.
KB Home’s strong operational execution—reflected in improved margins and customer satisfaction—has been a key differentiator in the competitive homebuilding sector.
Within homebuilding, the housing gross margin (excluding inventory-related charges) improved 10 basis points (bps) year over year to 20.9%. This improvement came despite ongoing challenges such as elevated mortgage rates and fluctuating material costs. Our model anticipated the housing gross margin to be 21% for the quarter.
Selling, general and administrative expenses (SG&A) — as a percentage of housing revenues — decreased 50 bps to 9.4%, reflecting increased operating leverage from higher housing revenues.
Homebuilding’s operating margin (excluding inventory-related charges) was up 60 bps to 11.5%, owing to higher housing gross margin and improved operating leverage. We expected the operating margin to be 11.3% for the reported quarter.
Financial Services: The segment's revenues declined 23.8% year over year to $6.85 million. The pretax income was $13.1 million, up 7.7% from a year ago, mainly due to increased equity in income of KBH’s mortgage banking joint venture.
KBH’s Fiscal 2024 Highlights
For the full year, the company generated $6.93 billion in total revenues (up 8.1% year over year), with EPS rising to $8.45, an increase of more than 20% compared to fiscal 2023. Homes delivered were up 7% to 14,169. The ASPs of the homes delivered were $486,900, up from $481,300 a year ago. Adjusted gross margins were 21.1% (down 30 bps), aligning with its historical performance.
KB Home’s Financial Position
KB Home had cash and cash equivalents of $598 million as of Nov. 30, 2024, down from $727.1 million reported at the end of fiscal 2023. The company had a total liquidity of $1.68 billion, including $1.08 billion of available capacity under the unsecured revolving credit facility. No cash borrowings were outstanding under the revolver on Nov. 30, 2024.
As of the fiscal 2024-end, the debt-to-capital ratio improved to 29.4% from 30.7% at the end of 2023.
In fiscal 2024, it repurchased approximately 4,725,181 shares of its outstanding common stock for $350 million. As of Nov. 30, 2024, it had $700 million in stock remaining under the repurchase authorization.
KBH’s Fiscal 2025 Guidance
For fiscal 2025, the company expects housing revenues to be in the $7-$7.50 billion band. ASP is estimated to be $488,000-$498,000.
Assuming no inventory-related charges, KB Home now expects the housing gross margin to be between 20% and 21%.
Homebuilding’s operating margin (assuming no inventory-related charges) is now expected to be 10.7%. SG&A expenses, as a percentage of housing revenues, are now likely to be in the range of 9.6%-10%. It projects an effective tax rate of approximately 24%. The company expects the ending community count to be within 250.
Lennar Corporation (LEN - Free Report) reported tepid fourth-quarter fiscal 2024 results, wherein its adjusted earnings and total revenues missed the Zacks Consensus Estimate and declined year over year.
Lennar’s quarterly performance was directly hit by a lag in the home sales pace due to a high mortgage rate scenario and low average selling price (ASP). Due to the affordability issue, the new orders during the quarter also showcased a downward trend.
Acuity Brands, Inc. (AYI - Free Report) reported mixed results in the first quarter of fiscal 2025 (ended Nov. 30, 2024). Earnings exceeded the Zacks Consensus Estimate, but net sales were below the same. Earnings beat the consensus mark for the 19th consecutive quarter. Acuity Brands stock rose 3.2% yesterday during the trading session.
For fiscal 2025, Acuity Brands expects net sales between $4.3 billion and $4.5 billion (indicating growth from $3.84 billion reported in fiscal 2024), with adjusted EPS in the range of $16.50-$18.00 (depicting growth from $15.56 reported in fiscal 2024).
RPM International Inc. (RPM - Free Report) reported impressive second-quarter fiscal 2025 (ended Nov. 30, 2024) results with earnings and sales beating the Zacks Consensus Estimate. Both metrics increased on a year-over-year basis.
RPM reported strong earnings on the back of record adjusted EBIT for the 12th consecutive quarter and reduced interest expenses. For fiscal 2025, RPM still expects total net sales to increase in the low-single digits percentage from a year ago.
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KB Home's Q4 Earnings & Revenues Beat Estimates, Stock Up
KB Home (KBH - Free Report) reported impressive fiscal fourth-quarter 2024 results, wherein both revenues and earnings surpassed expectations. On a year-over-year basis, both metrics increased, highlighting its resilience in a fluctuating housing market.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Shares of this leading homebuilder jumped 10.9% in the after-market trading session yesterday. Investors’ sentiments might have been boosted by the company’s results that underscore the effectiveness of KB Home's strategy, driven by faster build times and a strong appetite for homeownership despite mortgage rate pressures. While challenges remain, its strong order book and expanded community count suggest a solid growth trajectory for 2025.
KB Home is optimistic about 2025. However, challenges such as mortgage rate headwinds and potential regulatory shifts could temper the pace of growth. Still, the company’s robust investments in land and its “Built to Order” model provide a cushion against market uncertainties.
KB Home Price, Consensus and EPS Surprise
KB Home price-consensus-eps-surprise-chart | KB Home Quote
KBH’s Earnings & Revenue Discussion
KBH reported adjusted earnings per share (EPS) of $2.52, beating the Zacks Consensus Estimate of $2.45 by 2.9% and increasing 36.2% from the year-ago level. Total revenues of $2 billion topped the consensus mark of $1.99 billion by 0.4% and increased 19.5% on a year-over-year basis.
Segment Details of KBH’s Quarterly Release
Homebuilding: The segment's revenues of $1.993 billion grew 19.7% from the prior-year quarter’s level. The number of homes delivered was 3,978 units, up 17% from the year-ago period’s level. The reported figure was better than our projection of 3,850 units for the quarter. The average selling price, or ASP, also increased 3% from a year ago to $501,000. Our model had predicted ASP to be $511,600 for the fiscal fourth quarter. Notably, build times were reduced by 28% year over year, enabling faster backlog turnover and improved customer satisfaction.
Net orders grew by a significant 41% to 2,688 units from the prior year. The value of net orders was also up 41% from the year-ago quarter to $1.32 billion. We projected orders to be 3,008 units or $1.51 billion for the fiscal fourth quarter. Absorption or monthly net orders per community increased to 3.5 from 2.7.
The cancelation rate, as a percentage of gross orders, was 17% compared with 28% in the year-ago period.
The quarter-end backlog totaled 4,434 homes, down from the year-ago figure of 5,510 units. Further, potential housing revenues from the backlog declined 16% from the prior-year period to $2.24 billion.
The average community count was up 8% to 256, and the ending community count rose 7% year over year to 258.
KB Home’s strong operational execution—reflected in improved margins and customer satisfaction—has been a key differentiator in the competitive homebuilding sector.
Within homebuilding, the housing gross margin (excluding inventory-related charges) improved 10 basis points (bps) year over year to 20.9%. This improvement came despite ongoing challenges such as elevated mortgage rates and fluctuating material costs. Our model anticipated the housing gross margin to be 21% for the quarter.
Selling, general and administrative expenses (SG&A) — as a percentage of housing revenues — decreased 50 bps to 9.4%, reflecting increased operating leverage from higher housing revenues.
Homebuilding’s operating margin (excluding inventory-related charges) was up 60 bps to 11.5%, owing to higher housing gross margin and improved operating leverage. We expected the operating margin to be 11.3% for the reported quarter.
Financial Services: The segment's revenues declined 23.8% year over year to $6.85 million. The pretax income was $13.1 million, up 7.7% from a year ago, mainly due to increased equity in income of KBH’s mortgage banking joint venture.
KBH’s Fiscal 2024 Highlights
For the full year, the company generated $6.93 billion in total revenues (up 8.1% year over year), with EPS rising to $8.45, an increase of more than 20% compared to fiscal 2023. Homes delivered were up 7% to 14,169. The ASPs of the homes delivered were $486,900, up from $481,300 a year ago. Adjusted gross margins were 21.1% (down 30 bps), aligning with its historical performance.
KB Home’s Financial Position
KB Home had cash and cash equivalents of $598 million as of Nov. 30, 2024, down from $727.1 million reported at the end of fiscal 2023. The company had a total liquidity of $1.68 billion, including $1.08 billion of available capacity under the unsecured revolving credit facility. No cash borrowings were outstanding under the revolver on Nov. 30, 2024.
As of the fiscal 2024-end, the debt-to-capital ratio improved to 29.4% from 30.7% at the end of 2023.
In fiscal 2024, it repurchased approximately 4,725,181 shares of its outstanding common stock for $350 million. As of Nov. 30, 2024, it had $700 million in stock remaining under the repurchase authorization.
KBH’s Fiscal 2025 Guidance
For fiscal 2025, the company expects housing revenues to be in the $7-$7.50 billion band. ASP is estimated to be $488,000-$498,000.
Assuming no inventory-related charges, KB Home now expects the housing gross margin to be between 20% and 21%.
Homebuilding’s operating margin (assuming no inventory-related charges) is now expected to be 10.7%. SG&A expenses, as a percentage of housing revenues, are now likely to be in the range of 9.6%-10%. It projects an effective tax rate of approximately 24%. The company expects the ending community count to be within 250.
KBH’s Zacks Rank
KB Home currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Recent Construction Releases
Lennar Corporation (LEN - Free Report) reported tepid fourth-quarter fiscal 2024 results, wherein its adjusted earnings and total revenues missed the Zacks Consensus Estimate and declined year over year.
Lennar’s quarterly performance was directly hit by a lag in the home sales pace due to a high mortgage rate scenario and low average selling price (ASP). Due to the affordability issue, the new orders during the quarter also showcased a downward trend.
Acuity Brands, Inc. (AYI - Free Report) reported mixed results in the first quarter of fiscal 2025 (ended Nov. 30, 2024). Earnings exceeded the Zacks Consensus Estimate, but net sales were below the same. Earnings beat the consensus mark for the 19th consecutive quarter. Acuity Brands stock rose 3.2% yesterday during the trading session.
For fiscal 2025, Acuity Brands expects net sales between $4.3 billion and $4.5 billion (indicating growth from $3.84 billion reported in fiscal 2024), with adjusted EPS in the range of $16.50-$18.00 (depicting growth from $15.56 reported in fiscal 2024).
RPM International Inc. (RPM - Free Report) reported impressive second-quarter fiscal 2025 (ended Nov. 30, 2024) results with earnings and sales beating the Zacks Consensus Estimate. Both metrics increased on a year-over-year basis.
RPM reported strong earnings on the back of record adjusted EBIT for the 12th consecutive quarter and reduced interest expenses. For fiscal 2025, RPM still expects total net sales to increase in the low-single digits percentage from a year ago.