KB Home (KBH) Q4 2023 earnings summary

Executive summary

• FY2023 revenue was $6.41B and diluted EPS was $7.03, both down YoY; book value per share rose 15% to $50.22.

• Q4 net orders rose 176% to 1,909 as cancellations fell; early-2024 orders strengthened following lower mortgage rates.

• Built-to-Order lets buyers personalize home plans, finishes, lots and size; it represents ~65%–70% of business.

Financial highlights

• Q4 total revenue was $1.67B vs. $1.94B; net income was $150.3M vs. $216.4M, and diluted EPS was $1.85 vs. $2.47.

• Q4 housing revenue was $1.66B, down 14%; deliveries fell 10% to 3,407 and average selling price fell 5% to $487,300.

• FY2023 revenue was $6.41B vs. $6.90B; net income was $590.2M vs. $816.7M, and diluted EPS was $7.03 vs. $9.09.

• Q4 net order value increased 157% to $932.6M; ending backlog fell 28% to 5,510 homes valued at $2.67B.

• Q4 SG&A rose 190 bps to 9.9% of housing revenue, reflecting higher compensation and commissions and lower operating leverage.

Outlook and guidance

• FY2024 housing revenue guidance was $6.40B–$6.80B, with average selling price of $480,000–$490,000.

• FY2024 homebuilding operating margin guidance was ~11.0% and housing gross margin guidance ~21.0%, assuming no inventory-related charges; SG&A was expected at ~10.0% of housing revenue.

• Ending community count was expected to reach ~270, up 12%; owned or controlled lots covered most anticipated delivery targets through 2025, with owned lots representing 3.1 years of supply.

• A large sold-home backlog supports managed starts, even-flow community production, cost efficiencies and delivery predictability.