KB Home (NYSE: KBH) has reported its 2024 second-quarter results, showcasing various key metrics that have surpassed the high end of their guidance ranges. Revenues for the quarter totaled $1.71 billion, with a 11% increase in diluted earnings per share to $2.15. Despite a decrease in homes delivered, the average selling price rose to $483,000 from $479,500. However, homebuilding operating income fell to $188.2 million from $202.1 million, with the operating income margin dropping to 11.1% from 11.5%.
The company's financial services pretax income rose 16% to $13.3 million, attributed in part to an increased equity in income from its mortgage banking joint venture. Additionally, a $12.5 million gain was associated with the sale of a privately held technology company, contributing to the total pretax income which increased to $221.1 million from $214.9 million. Net income grew 2% to $168.4 million, with a corresponding 11% growth in diluted earnings per share to $2.15. The effective tax rate was 23.8%, compared to 23.5%.
For the six months ended May 31, 2024, KB Home saw total revenues of $3.18 billion, up from $3.15 billion. Homes delivered increased 2% to 6,560, although the average selling price declined slightly to $481,700 from $486,000. Net income for the period increased 6% to $307.1 million, while diluted earnings per share were up 16% to $3.91.
In terms of backlog and net orders, net orders for the quarter increased 2% to 3,997, with net order value rising 7% to $2.03 billion. The cancellation rate as a percentage of gross orders improved to 13%, compared to 22%. However, the company's ending backlog homes and ending backlog value were down 14% and 10%, respectively.
The company's average community count for the quarter was down 4% to 243, with an ending community count that was essentially flat at 247. On a sequential basis, the ending community count expanded 4%.
Looking at the balance sheet as of May 31, 2024, the company had total liquidity of $1.73 billion, including $643.5 million of cash and cash equivalents. Inventories totaled $5.34 billion, up 4%, with investments in land and land development for the six months ended May 31, 2024, increasing 64% to $1.26 billion.
The company's notes payable of $1.70 billion were essentially unchanged, with the debt to capital ratio improving 90 basis points to 29.8%. Stockholders' equity increased to $3.99 billion, and the board of directors approved an increase in the quarterly cash dividend on the company’s common stock to $.25 per share from $.20 per share, as well as the repurchase of up to $1.00 billion of the company’s outstanding common stock.
Based on the company’s 75.2 million outstanding shares as of May 31, 2024, book value per share of $53.08 increased 14% year over year.
The company is providing guidance for its 2024 full year, including housing revenues in the range of $6.70 billion to $6.90 billion, and an average selling price in the range of $485,000 to $495,000. Additionally, the effective tax rate is expected to be approximately 23.0%, with an ending community count in the range of 250 to 255.
In light of these results, KB Home plans to provide further guidance for its 2024 third quarter on its conference call today at 2:00 p.m. Pacific time, 5:00 p.m. Eastern time. Today the company's shares have moved -2.1% to a price of $68.04. Check out the company's full 8-K submission here.
