LOS ANGELES - KB Home (NYSE: NYSE:KBH) has reported a robust start to fiscal 2024, with first-quarter earnings and revenue surpassing analyst expectations. The company announced a first-quarter EPS of $1.76, which is $0.19 higher than the analyst estimate of $1.57. Revenue for the quarter also exceeded forecasts, coming in at $1.47 billion against the consensus estimate of $1.46 billion.
Jeffrey Mezger, Chairman and Chief Executive Officer, attributed the strong performance to improved market conditions since the end of the 2023 fiscal year, leading to a significant increase in net orders, which were up 55%, and net order value, which rose 58% to $1.58 billion. The company’s focus on personalization options, well-designed products, and attractive price points, along with an expanding community count, have positioned it well to capitalize on the current demand.
The company's revenue saw a 6% increase from the same quarter last year, while net income grew by 10% to $138.7 million. The diluted earnings per share saw a substantial rise of 21%, reflecting the impact of the company’s common stock repurchases over the past several quarters. The average selling price was $480,100, down from $494,500 in the same quarter last year, while home deliveries increased by 9% to 3,037.
KB Home's financial services pretax income nearly doubled to $11.6 million, mainly due to the increased equity in income of the company's mortgage banking joint venture, driven by a higher volume of interest rate locks and loan originations.
Looking ahead, KB Home provided guidance for its 2024 full year with housing revenues expected to be in the range of $6.50 billion to $6.90 billion. The average selling price is projected to range from $480,000 to $490,000. Homebuilding operating income is anticipated to be between 10.9% and 11.3% of revenues, assuming no inventory-related charges. The housing gross profit margin is forecasted to be between 21.0% and 21.4%, with selling, general, and administrative expenses expected to be approximately 10.2% of housing revenues. The effective tax rate is estimated to be around 23.0%, and the ending community count is predicted to be about 260, up 7% from the previous year.
The company also highlighted its commitment to returning capital to shareholders, with $50 million repurchased in common stock and plans for additional repurchases in 2024. The balance sheet remains healthy with total liquidity of $1.75 billion, including cash and cash equivalents and available capacity under its unsecured revolving credit facility.
KB Home's stock movement following the earnings release was not specified, indicating that the market response may not have been significant enough to warrant a major conclusion based on the percentage change. However, the solid financial results and positive outlook for the year reflect the company's strong position in the housing market.
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