KB Home Sales Jump 19% and Home Backlog Value Soars 43%

Scott Peters
22 Jun, 2022
New York City

KB Home sales and earnings rose despite supply chain disruption challenges and rising mortgage rates.  

Consolidated sales in the second quarter ending in May increased 19% to $1.72 billion and net income soared 47% to $210 million. 

Diluted earnings per share surged 55% to $2.32 from $1.50 a year ago. 

The home builder delivered 3,469 homes, matching the deliveries in the quarter a year ago and average selling price increased 21% to $494,300. 

Price increase played a key role in lifting gross margin 390 basis points to 25.3% offset by higher construction cost and elevated lumber prices and increased expenses to support current operations. 

Selling, general and administrative expenses as a percentage of housing revenues improved 30 basis points to 9.8%, primarily reflecting lower external sales commissions and increased operating leverage from higher revenues, partly offset by higher expenses to support growth.

Operating income margin Improved 410 Basis Points to 15.4% and net order value increased 4% to $2.12 Billion and ending backlog value soared 43% to $6.12 Billion.

 

Regional Sales 

Average sales price in the West Coast region increased to $739,800 from $622,000, in the Southwest region rose to $424,000 from $360,900, in the Central region advanced to $387,000 from $317,000, and in the Southeast region escalated to $359,000 from $293,000. 

The home builder delivered 1,029 homes in the West Coast region, 685 in the Southeast region, 1,117 in the Central region, and 638 in the Southeast region. 

The company delivered a total of 3,469 homes compared to 3,504 a year ago. 

The home builder received 1,088 new home orders in the West Coast region, 719 in the Southwest region, 1,300 in the Central region, and 807 in the Southeast region. 

The company received a total of 3,914 new home orders totaling $2.12 billion compared to 4,300 totaling $2.04 billion a year ago.     

Total home order backlog increased to 12,331 homes valued at $6.1 billion compared to 10,034 homes valued at $4.3 billion. 

 

Guidance and Outlook 

The home builder guided sales in the fiscal year between $7.3 billion and $7.5 billion and average home selling price of $500,000. 

In the fiscal year 2022, the company guided homebuilding operating income as a percentage of revenues in the range of 16.0% to 16.6%, housing gross profit margin in the range of 25.6% to 26.2%, assuming no inventory-related charges.  

Selling, general and administrative expenses as a percentage of housing revenues are estimated in the range of 9.3% to 9.7%.

The home builder also guided for a tax rate of 25.0% and return on equity to exceed 27%. 

 

Company and Stock 

KB Home is headquartered in Los Angeles, California and has built 655,000 homes in the company's 65-year history.

In regular trading hours before the release of earnings news, KB Home stock increased 2.4% to $26.23. 

In the year so far, KB Home stock has declined 39.2% to $26.23.