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1 Investor Presentation Fourth Quarter 2024
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2 Items in this presentation, and statements by KB Home management in relation to this presentation or otherwise, may be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current (at the time made) expectations and projections about future events and are subject to risks, uncertainties, and assumptions about our operations, economic and market factors, and the homebuilding industry, among other things. These statements are not guarantees of future performance. We do not have a specific policy or intent of updating or revising forward-looking statements. If we update or revise any such statement(s), no assumption should be made that we will further update or revise that statement(s) or update or revise any other such statement(s). Actual events and results may differ materially from those expressed or forecasted in forward-looking statements due to a number of factors. The most important risk factors that could cause our actual performance and future events and actions to differ materially from such forward- looking statements include, but are not limited to the following: general economic, employment and business conditions; population growth, household formations and demographic trends; conditions in the capital, credit and financial markets; our ability to access external financing sources and raise capital through the issuance of common stock, debt or other securities, and/or project financing, on favorable terms; the execution of any securities repurchases pursuant to our board of directors’ authorization; material and trade costs and availability, including the greater costs associated with achieving current and expected higher standards for ENERGY STAR certified homes, and delays related to state and municipal construction, permitting, inspection and utility processes, which have been disrupted by key equipment shortages; consumer and producer price inflation; changes in interest rates, including those set by the Federal Reserve, which the Federal Reserve may increase to moderate inflation, as it did in 2022 and 2023, and those available in the capital markets or from financial institutions and other lenders, and applicable to mortgage loans; our debt level, including our ratio of debt to capital, and our ability to adjust our debt level and maturity schedule; our compliance with the terms of our revolving credit facility and our senior unsecured term loan; the ability and willingness of the applicable lenders and financial institutions, or any substitute or additional lenders and financial institutions, to meet their commitments or fund borrowings, extend credit or provide payment guarantees to or for us under our revolving credit facility or unsecured letter of credit facility; volatility in the market price of our common stock; home selling prices, including our homes’ selling prices, being unaffordable relative to consumer incomes; weak or declining consumer confidence, either generally or specifically with respect to purchasing homes; competition from other sellers of new and resale homes; weather events, significant natural disasters and other climate and environmental factors, such as a lack of adequate water supply to permit new home communities in certain areas; any failure of lawmakers to agree on a budget or appropriation legislation to fund the federal government’s operations (also known as a government shutdown), and financial markets’ and businesses’ reactions to any such failure; potential regulatory instability associated with the upcoming change in the U.S. presidential administrations; government actions, policies, programs and regulations directed at or affecting the housing market (including the tax benefits associated with purchasing and owning a home, and the standards, fees and size limits applicable to the purchase or insuring of mortgage loans by government-sponsored enterprises and government agencies), the homebuilding industry, or construction activities; changes in existing tax laws or enacted corporate income tax rates, including those resulting from regulatory guidance and interpretations issued with respect thereto, such as Internal Revenue Service guidance regarding heightened qualification requirements for federal tax credits for building energy-efficient homes; changes in U.S. trade policies, including the imposition of tariffs and duties on homebuilding materials and products, and related trade disputes with and retaliatory measures taken by other countries; disruptions in world and regional trade flows, economic activity and supply chains due to the military conflict and other attacks in the Middle East region and military conflict in Ukraine, including those stemming from wide-ranging sanctions the U.S. and other countries have imposed or may further impose on Russian business sectors, financial organizations, individuals and raw materials, the impact of which may, among other things, increase our operational costs, exacerbate building materials and appliance shortages and/or reduce our revenues and earnings; the adoption of new or amended financial accounting standards and the guidance and/or interpretations with respect thereto; the availability and cost of land in desirable areas and our ability to timely and efficiently develop acquired land parcels and open new home communities; impairment, land option contract abandonment or other inventory-related charges, including any stemming from decreases in the value of our land assets; our warranty claims experience with respect to homes previously delivered and actual warranty costs incurred; costs and/or charges arising from regulatory compliance requirements, including the costs to implement recent federal and state climate-related disclosure rules, or from legal, arbitral or regulatory proceedings, investigations, claims or settlements, including unfavorable outcomes in any such matters resulting in actual or potential monetary damage awards, penalties, fines or other direct or indirect payments, or injunctions, consent decrees or other voluntary or involuntary restrictions or adjustments to our business operations or practices that are beyond our current expectations and/or accruals; our ability to use/realize the net deferred tax assets we have generated; our ability to successfully implement our current and planned strategies and initiatives related to our product, geographic and market positioning, gaining share and scale in our served markets, through, among other things, our making substantial investments in land and land development, which, in some cases, involves putting significant capital over several years into large projects in one location, and in entering into new markets; our operational and investment concentration in markets in California; consumer interest in our new home communities and products, particularly from first-time homebuyers and higher- income consumers; our ability to generate orders and convert our backlog of orders to home deliveries and revenues, particularly in key markets in California; our ability to successfully implement our business strategies and achieve any associated financial and operational targets and objectives, including those discussed in this release or in any of our other public filings, presentations or disclosures; income tax expense volatility associated with stock-based compensation; the ability of our homebuyers to obtain homeowners and flood insurance policies, and/or typical or lender-required policies for other hazards or events, for their homes, which may depend on the ability and willingness of insurers or government-funded or -sponsored programs to offer coverage at an affordable price or at all; the ability of our homebuyers to obtain residential mortgage loans and mortgage banking services, which may depend on the ability and willingness of lenders and financial institutions to offer such loans and services to our homebuyers; the performance of mortgage lenders to our homebuyers; the performance of KBHS Home Loans, LLC (“KBHS”); the ability and willingness of lenders and financial institutions to extend credit facilities to KBHS to fund its originated mortgage loans; information technology failures and data security breaches; an epidemic, pandemic or significant seasonal or other disease outbreak, and the control response measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it, which may precipitate or exacerbate one or more of the above-mentioned and/or other risks, and significantly disrupt or prevent us from operating our business in the ordinary course for an extended period; widespread protests and/or civil unrest, whether due to political events, social movements or other reasons; and other events outside of our control. Please see our periodic reports and other filings with the Securities and Exchange Commission for a further discussion of these and other risks and uncertainties applicable to our business. Forward- Looking Statements
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3 Built to Order Model Provides Competitive Advantages Buyers Want Choice Buyers select their floor plan, lot, square footage and personalized finishes in our Design Studios based on what they value and can afford. Approximately 60% to 70% of our business is Built to Order. Choice Includes Finished Homes An important complement to our “choice” model is the availability of quick move-in homes in each of our communities to serve the buyer who prioritizes a near-term move-in date over personalization. Choice Influences Affordability Buyers are empowered to significantly influence their overall sales price based on their selections, including a non-premium or premium lot and standard finishes or upgrades. Approximately 70% of our communities offer plans with square footage below 1,600—smaller homes with similar room counts and livability, at lower starting base prices without compromising gross margin percentages. Competitive Differentiator Resale homes are our largest competitor. Our affordable choice offering provides an important point of differentiation in attracting buyers. 4.6 6.3 4.1 3.8 4.43.9 4.2 3.1 3.4 3.6 2020 2021 2022 2023 2024 Buyers Value Choice; As a Result, Our BTO Model Drives High Monthly Absorption per Community KBH Peer Group Average* Sources: Sell-Side Analyst Research and Form 10-K Filings * Includes CCS, DHI, LEN, MTH, NVR, PHM, TMHC, TOL, TPH ** Reflects estimates for all peers, excluding LEN and TOL **
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4 Built to Order Also Attracts Largest Demand Segments of Market Q4 2024 Buyer Profile (Based on Homes Delivered) A Leader in the 1st Time Buyer Segment While Drawing a Mix of Buyers to Our Communities Invest in land positions within prime growth submarkets Position our product to target the median household income in each submarket BTO enhances value and affordability through choice of lot, square footage, floor plan and elevation, and the ability to personalize in our Design Studios While we primarily target the 1st time and affordable 1st move-up buyers, our BTO business model also appeals to 2nd move-up buyers and empty nesters who can make a different set of choices in the same community 50% 24% 11% 15% 1st Time 1st Move-Up 2nd Move-Up Active Adult
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5 Dedicated to Providing World Class Customer Service • KB Home’s personalized, customer-centric Built-to-Order business model enables us to develop long-term relationships with our customers • Our community teams partner with customers through each major step of their purchase of a KB home: sale – mortgage – studio – construction – closing – post closing • Customers recognize the value of our partnership. Recent customer surveys conducted by an independent, third-party source such as TrustBuilder® has given KB Home exceptional customer satisfaction ratings. TrustBuilder® data as of December 11, 2024.
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6 Fourth Quarter 2024
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7 Principal Markets West Coast Southwest Central Southeast California, Idaho, Washington Arizona, Nevada Colorado, Texas Florida, North Carolina Q4 2024 Mix West Coast Southwest Central Southeast Homebuilding Revenues 46% 18% 19% 17% Deliveries 32% 20% 27% 21% Average Selling Price $706K $456K $355K $412K Net Order Value 43% 20% 20% 17% Backlog Value 39% 24% 19% 18% Growth-Oriented Geographic Footprint
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8 Fourth Quarter 2024 Highlights (all comparisons on a year-over-year basis) Q4 2024 Q4 2023 % Change Housing Revenues $1.99 billion $1.66 billion 20% Deliveries 3,978 3,407 17% Average Selling Price $501,000 $487,300 3% Net Orders 2,688 1,909 41% Net Order Value $1.32 billion $932.6 million 41% Backlog Homes 4,434 5,510 -20% Backlog Value $2.24 billion $2.67 billion -16% Ending Community Count 258 242 7% Average Community Count 256 236 8% Absorption (net orders per community, per month) 3.5 2.7 30% • Revenues increased 19% to $2.0 billion • Homebuilding operating income increased 27% to $229.1 million – Homebuilding operating income margin expanded 60 basis points to 11.5% – Housing gross profit margin increased to 20.9%, compared to 20.7%. Excluding inventory-related charges, housing gross profit margin was 20.9%, compared to 20.8%. – Selling, general and administrative expenses as a percentage of housing revenues improved 50 basis points to 9.4% • Pretax income grew 24% to $247.7 million and included financial services pretax income of $13.1 million which increased 8% • Net income rose 27% to $190.6 million and diluted earnings per share grew 36% to $2.52 • Total liquidity was $1.68 billion, which included $598.0 million of cash and cash equivalents and $1.08 billion of available capacity under the Company’s unsecured revolving credit facility, with no cash borrowings outstanding • During the quarter, the Company repurchased 1,264,484 shares of its outstanding common stock at a total cost of $100 million • Stockholders’ equity increased to $4.06 billion, and book value per share increased 12% to $56.27
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9 $1,394 $1,379 $1,458 $1,715 $1,758 $1,702 $1,839 $1,574 $1,746 $1,933 $1,660 $1,993 '22 '23 '24 '22 '23 '24 '22 '23 '24 '22 '23 '24 Housing Revenues ($ in millions) Second Quarter Third Quarter Fourth QuarterFirst Quarter
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10 Average Selling Price $486 $495 $480 $494 $480 $483 $509 $466 $481 $510 $487 $501 '22 '23 '24 '22 '23 '24 '22 '23 '24 '22 '23 '24 Second Quarter Third Quarter Fourth QuarterFirst Quarter ($ in thousands)
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11 Homebuilding Operating Income Margin* 12.2% 11.7% 10.9% 15.5% 11.7% 11.1% 18.1% 11.4% 10.9% 15.8% 10.9% 11.5% '22 '23 '24 '22 '23 '24 '22 '23 '24 '22 '23 '24 Second Quarter Third Quarter Fourth QuarterFirst Quarter *Excludes inventory-related charges. See Appendix: Reconciliation of Non-GAAP Financial Measures.
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12 Housing Gross Profit Margin – Reported 22.4% 21.5% 21.5% 25.3% 21.1% 21.1% 26.7% 21.5% 20.6% 22.4% 20.7% 20.9% '22 '23 '24 '22 '23 '24 '22 '23 '24 '22 '23 '24 Second Quarter Third Quarter Fourth QuarterFirst Quarter
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13 Housing Gross Profit Margin – As Adjusted* 22.4% 21.8% 21.6% 25.3% 21.4% 21.2% 27.0% 21.5% 20.7% 23.9% 20.8% 20.9% '22 '23 '24 '22 '23 '24 '22 '23 '24 '22 '23 '24 Second Quarter Third Quarter Fourth QuarterFirst Quarter *Excludes inventory-related charges. See Appendix: Reconciliation of Non-GAAP Financial Measures.
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14 SG&A Expense Ratio 10.2% 10.1% 10.8% 9.8% 9.6% 10.1% 8.9% 10.2% 9.8% 8.0% 9.9% 9.4% '22 '23 '24 '22 '23 '24 '22 '23 '24 '22 '23 '24 Second Quarter Third Quarter Fourth QuarterFirst Quarter
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15 Balanced Land Portfolio Q4 2024 Highlights • Total inventory was $5.53 billion • Total lots owned or controlled were 76,703 • Owned lots represented a supply of approximately 2.7 years based on homes delivered in the trailing 12 months • Owned / optioned split was 51% / 49% • We own or control all of the lots that we need to achieve our anticipated delivery targets through 2025 and the majority of 2026 15.0 14.0 15.4 17.0 17.7 21.2 22.4 23.6 24.1 25.2 22.3 19.3 17.5 17.0 18.4 18.2 17.9 20.3 22.3 23.9 11.4 11.1 10.5 12.3 12.6 12.7 12.9 12.3 12.3 11.3 9.9 8.8 8.3 7.8 7.3 7.0 7.1 10.1 10.3 13.1 24.5 23.7 22.5 23.7 25.3 26.9 26.3 29.0 29.4 30.8 27.2 24.0 21.9 19.2 17.7 17.4 16.6 18.6 20.1 21.1 12.3 11.7 11.9 14.0 14.1 16.7 19.4 21.9 22.4 22.5 19.7 16.7 14.7 13.9 13.7 13.4 13.9 16.5 16.5 18.6 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 West Coast Southwest Central Southeast Lots by Region (in 000’s)
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16 Average Community Count 213 211 221 237 251 253 240 236 240 243 251 256 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 20232022 2024
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17 Net Orders per Community per Month Second Quarter Third Quarter Fourth QuarterFirst Quarter 6.6 2.8 4.6 6.2 5.2 5.5 3.1 4.3 4.1 1.0 2.7 3.5 '22 '23 '24 '22 '23 '24 '22 '23 '24 '22 '23 '24
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18 $2,154 $1,002 $1,582 $2,125 $1,900 $2,032 $979 $1,512 $1,543 $363 $933 $1,317 '22 '23 '24 '22 '23 '24 '22 '23 '24 '22 '23 '24 Net Order Value Second Quarter Third Quarter Fourth QuarterFirst Quarter ($ in millions)
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19 Backlog Value $5,711 $3,315 $2,792 $6,121 $3,457 $3,122 $5,261 $3,395 $2,919 $3,692 $2,668 $2,243 '22 '23 '24 '22 '23 '24 '22 '23 '24 '22 '23 '24 Second Quarter Third Quarter Fourth QuarterFirst Quarter ($ in millions)
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20 Generating Significant Gross Operating Cash Flow $2,005 $2,496 $2,586 $2,884 $3,207 ($1,694) ($2,533) ($2,403) ($1,801) ($2,844) $311 $(37) $183 $1,083 $363 Gross Cash provided by Operating Activities Land Acquisition and Development Investment Net Cash provided by (used in) Operating Activities (As Reported) 2020 2021 2022 2023 2024 ($ in millions) Highlights From 2020 through 2024: • We generated over $13 billion in gross operating cash flow • Approximately 86% of this cash flow was reinvested in our future growth through land acquisition and development spend • We returned $1.37 billion in cash to stockholders through dividends and share repurchases
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21 Highlights Leverage • Since fiscal year-end 2020, we have reduced our debt-to-capital ratio by more than 10 percentage points Liquidity • Total liquidity, including cash and revolver availability, was $1.68 billion at November 30, 2024. No cash borrowings outstanding under the revolver at November 30, 2024. Credit Ratings and Outlook • Moody’s Ratings: Ba1 / Stable • S&P Global: BB+ / Stable Upcoming Maturities • Our next maturity is not until August 25, 2026, when the Term Loan matures Healthy Capital Structure 39.6% 35.8% 33.4% 30.7% 29.4% 2020 2021 2022 2023 2024 Debt-to-Capital Ratio Liquidity and Debt Maturity Summary at November 30, 2024 $1,082 $598 $300 $300 $350 $390 $360 Liquidity 2024 2025 2026 2027 2028 2029 2030 2031 Revolver Availability Unrestricted Cash Senior Notes Term Loan Coupon: 6.875% 4.8% 7.25% 4.0% ($ in millions)
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22 The ESG Difference
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23 Leadership in Sustainable Homebuilding Energy Savings Comparison Our proprietary tool demonstrating the lower total cost of homeownership possible with a KB home** KB Home provides this comparison for every floor plan at each of our communities * Data as of December 11, 2024 ** Estimated ** Lower cost of homeownership is relative to a typical new or resale home. Received a record 30 ENERGY STAR® Market Leader Awards in 2024 200,000+ Total U.S. EPA ENERGY STAR Certified New Homes 25,000 Cumulative Solar Homes 26,000+ Total U.S. EPA WaterSense & Water Smart Homes Approx. $1.3 Billion* Cumulative Utility Bill Savings Approx. 2.1 Billion Gallons* Water Conserved Annually Approx. 8 Billion Pounds* Fewer CO2 Emissions
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24 Giving Back to Our Communities
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25 Independent • Nine of our ten directors are independent • Independent directors lead all Board committees Accountable • Directors are elected annually under a majority voting standard • In 2024, our directors received an average of 95% support • Directors and senior executives are subject to robust stock ownership requirements Aligned • We have one class of outstanding voting securities that allows each holder one vote for each share held • No supermajority voting requirements Strong Corporate Governance Governance Practices: A Snapshot
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26 Summary
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27 KB Home – A Compelling Story Well positioned Existing geographic footprint offers potential for substantially larger scale in markets selected for their long-term economic and demographic growth potential Compelling Focused on 1st time and affordable 1st move-up buyers, while also appealing to 2nd move-up buyers and empty nesters, thereby targeting the largest homebuyer demand segments Advantages of BTO Sell and build the home the customer values and can afford, which helps drive absorption. With a large backlog of sold homes, we can manage starts to achieve even-flow production at the community level, generating efficiencies in overhead and cost to build, and we have greater predictability on deliveries. Demonstrated leadership in sustainability With an industry-leading over 200,000 ENERGY STAR homes delivered, we are committed to helping our buyers lower the cost of homeownership. Our ENERGY STAR homes are up to 20% more efficient than standard new homes built to code. Key Takeaways
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28 $1.55 $3.58 $4.51 $6.37 $6.90 2012 2016 2019 2023 2024 Housing Revenues ($ in billions) 0.5% 5.7% 7.7% 11.4% 11.1% 2012 2016 2019 2023 2024 Homebuilding Operating Income Margin(1) 15.8% 16.6% 18.7% 21.4% 21.1% 2012 2016 2019 2023 2024 Housing Gross Margin(1) ($0.76) $1.12 $2.85 $7.03 $8.45 2012 2016 2019 2023 2024 Diluted Earnings (Loss) per Share KB Home is a Stronger, More Profitable Company Today The growth in our scale and profitability, together with the health of our balance sheet, have transformed KB Home into a larger and stronger company. (1) Excluding inventory-related charges
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29 KB Home is a Stronger, More Profitable Company Today 82.1% 60.5% 42.3% 30.7% 29.4% 2012 2016 2019 2023 2024 Debt-to-Capital Ratio (15.1%) 6.3% 12.2% 15.7% 16.6% 2012 2016 2019 2023 2024 Return on Equity $12 $97 $20 $468 $422 2012 2016 2019 2023 2024 Capital Returned to Stockholders ($ in millions) $4.88 $20.25 $26.60 $50.22 $56.27 2012 2016 2019 2023 2024 Book Value per Share
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30 Robust Share Repurchases $188 $150 $411 $350 2021 2022 2023 2024 Share Repurchases ($ in millions) We are reinvesting in our growth and returning cash to stockholders through a significant share repurchase program, utilizing the $1 billion authorization that our Board approved in April 2024. We previously set a minimum level of $250 million for 2024 share repurchases, and by the end of the year, we completed $350 million of repurchases. In addition, we pay a quarterly cash dividend, which our Board of Directors has increased by 67% since July 2023, to a current annualized rate of $1.00 per share. 4.7m shares repurchased 4.9m shares repurchased 9.2m shares repurchased 4.7m shares Repurchased 5.1% of outstanding 5.6% of outstanding 11.0% of outstanding 6% of outstanding LTM Return of Capital Yield(1) vs. Peers 1.2% 0.6% 5.8% 4.1% 7.0% 4.7% KBH (FY24) Peer Group Average* LTM Dividend Yield LTM Net Share Repurchase Yield *Source: Company Filings and FactSet as of December 13, 2024 (CCS, DHI, LEN, MTH, NVR, PHM, TMHC, TOL, TPH ) (1) LTM return on capital yield defined as share repurchase yield plus dividend yield. (2) LTM net share repurchase calculated as share repurchases less shares issuances divided by average LTM equity market capitalization. (3) LTM dividend yield calculated as LTM dividends paid divided by average LTM equity market capitalization. (2) (3)
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31 Appendix
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32 Reconciliation of Non-GAAP Financial Measures The Company believes these non-GAAP financial measures, which assist management in making certain decisions, are relevant and useful to investors in understanding its operations and in providing meaningful period-to-period comparisons and may be helpful in comparing the Company with other homebuilding companies to the extent they provide similar information. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Housing Gross Profit Margin ` Housing Gross Profit Margin - As Reported 22.4% 25.3% 26.7% 22.4% 21.5% 21.1% 21.5% 20.7% 21.5% 21.1% 20.6% 20.9% Housing inventory-related charges - - 0.3 1.5 0.3 0.3 - 0.1 0.1 0.1 0.1 - Housing Gross Profit Margin - As Adjusted 22.4% 25.3% 27.0% 23.9% 21.8% 21.4% 21.5% 20.8% 21.6% 21.2% 20.7% 20.9% Homebuilding Operating Income Margin Homebuilding Operating Income Margin - As Reported 12.2% 15.4% 17.7% 14.4% 11.4% 11.5% 11.3% 10.9% 10.8% 11.1% 10.8% 11.5% Homebuilding inventory-related charges - 0.1 0.4 1.4 0.3 0.2 0.1 - 0.1 - 0.1 - Homebuilding operating income margin excluding inventory-related charges 12.2% 15.5% 18.1% 15.8% 11.7% 11.7% 11.4% 10.9% 10.9% 11.1% 10.9% 11.5% 202420232022
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33 For further information, please contact us: Investor Relations (310) 231-4000 investorrelations@kbhome.com Thank you for your interest in KB Home.