KB Home (NYSE: KBH) has reported its fourth-quarter and full-year results for 2023, revealing a mixed performance in the face of evolving market conditions. The company's revenues for the fourth quarter totaled $1.67 billion, with diluted earnings per share of $1.85. However, the homebuilder experienced a 10% decrease in homes delivered and a decline in average selling price compared to the previous year.
Jeffrey Mezger, the Chairman, President, and CEO of KB Home, expressed optimism about the company's position, stating, "We have experienced a meaningful sequential increase in our net orders for the first five weeks of our 2024 first quarter, as consumers are responding favorably to the recent decline in mortgage rates." Mezger also emphasized the company's focus on growing its profitable business and allocating cash flow to land acquisition, development, and returning capital to shareholders.
The company's financial results for the quarter showed a decrease in homebuilding operating income and housing gross profit margin. Net income and diluted earnings per share also experienced a decline compared to the previous year.
Looking at the full year, KB Home reported a decrease in homes delivered and net income, with diluted earnings per share at $7.03 compared to $9.09 in the prior year.
KB Home's balance sheet as of November 30, 2023, reflected an increase in cash and cash equivalents, while inventories decreased. The company also repurchased approximately 3.6 million shares of its outstanding common stock during the fourth quarter.
Providing guidance for the 2024 full year, the company expects housing revenues in the range of $6.40 billion to $6.80 billion, with an average selling price in the range of $480,000 to $490,000.
Mezger highlighted the company's objectives and outlook, stating, "With improving market conditions and our projected community count growth for 2024, we believe we are well-positioned to meet buyer demand. Our objectives remain consistent, focused on growing our profitable business and allocating our substantial cash flow to both land acquisition and development, as well as an ongoing return of capital to our shareholders, supporting our commitment toward driving long-term value."
The full 8-K submission from KB Home detailing its financial results and outlook for 2024 can be accessed here.
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $4,547 | $4,553 | $4,183 | $5,725 | $6,904 | $6,677 |
| Revenue Growth | n/a | 0.13% | -8.12% | 36.86% | 20.59% | -3.29% |
| Net Margins | 4% | 6% | 7% | 10% | 12% | 10% |
| Net Income (MM) | $170 | $269 | $296 | $565 | $817 | $656 |
| Earnings Per Share | $1.71 | $2.85 | $3.13 | $6.01 | $9.09 | $7.63 |
| EPS Growth | n/a | 66.67% | 9.82% | 92.01% | 51.25% | -16.06% |
| Diluted Shares (MM) | 101 | 94 | 94 | 94 | 89 | 83 |
| Free Cash Flow (MM) | $214 | $211 | $282 | -$77 | $138 | $1,142 |
| Capital Expenditures (MM) | $7 | $40 | $29 | $39 | $45 | $38 |
KB Home has growing revenues and increasing reinvestment in the business, exceptional EPS growth, and irregular cash flows. Furthermore, KB Home has decent net margins with a positive growth rate.
