KB Home Shares Gain On Better Than Expected Q2 Results

KB Home KBH reported second-quarter revenue growth of 19% year-over-year to $1.72 billion, beating the consensus of $1.63 billion. EPS grew 55% Y/Y to $1.32, beating the consensus of $2.01.

Homes delivered were flat at 3,469, and the average selling price rose 21% Y/Y to $494,300.

Homebuilding operating income grew 62% Y/Y to $264.5 million, and the operating income margin increased 410 bps to 15.4%. Adjusted housing gross profit margin expanded by 380 bps to 25.3%.

KBH’s financial services operations generated a pretax income of $18.7 million, up 75% Y/Y, reflecting significant growth in the equity in income of its mortgage banking joint venture, KBHS Home Loans, LLC.

Total pretax income grew 63% Y/Y to $282.9 million and, as a percentage of revenues, increased 430 bps to 16.4%.

Backlog value grew 43% Y/Y to $6.12 billion, with four regions generating increases ranging from 18% in the West Coast to 98% in the Southeast. The ending backlog grew 23% Y/Y to 12,331 homes. Net order value rose 4% Y/Y to $2.12 billion.

As a percentage of gross orders, the cancellation rate was 17%, compared to 9%. Inventories grew 16% Y/Y to $5.56 billion during the quarter.

KH Home had total liquidity of $925.6 million, with $244.2 million of cash and cash equivalents and $681.4 million of available capacity under its unsecured revolving credit facility, at the end of the quarter.

FY22 Guidance: KBH expects Housing revenues of 7.30 billion to $7.50 billion. (prior expectations $7.20 billion to $7.60 billion), The average selling price of ~$500,000.

It expects Homebuilding operating income as a percentage of revenues of 16.0% to 16.6% and a Housing gross profit margin of 25.6% to 26.2%.

Price Action: KBH shares are trading higher by 2.94% at $27 during the post-market session on Wednesday.

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