KB Home (KBH) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenues were $1.71 billion, down 3% year-over-year, with net income up 2% to $168.4 million and diluted EPS up 11% to $2.15; net orders increased 2% to 3,997 homes and net order value rose 7% to $2.03 billion.

• Backlog value declined 10% to $3.12 billion, with backlog homes down 14% to 6,270, but backlog conversion rate reached 61%, the highest Q2 rate since 2013.

• Book value per share increased 14% year-over-year to $53.08, supported by ongoing share repurchases, including $50 million in Q2.

• Demand remained strong despite mortgage rate volatility, with a low cancellation rate and net orders per community per month rising to 5.5.

• Total liquidity reached $1.73 billion, including $643.5 million in cash and $1.08 billion in revolver capacity.

Financial highlights

• Q2 2024 net income was $168.4 million (up 2% year-over-year); diluted EPS was $2.15 (up 11%).

• Housing gross profit margin held steady at 21.1% (21.2% as adjusted); operating income margin was 11.1%.

• SG&A expense ratio increased to 10.1% from 9.6% year-over-year.

• Q2 included a $12.5 million gain from the sale of a tech company ownership interest.

• Financial services pretax income rose 16% to $13.3 million.

Outlook and guidance

• Full-year 2024 housing revenues expected at $6.70–$6.90 billion; average selling price guidance: $485,000–$495,000.

• Q3 2024 housing revenues projected at $1.65–$1.75 billion; Q3 operating margin (ex-inventory charges) expected at 10.8%–11.4%.

• Full-year homebuilding operating income margin expected at 11.0%–11.4%; housing gross profit margin at 21.1%–21.5%.

• Effective tax rate for 2024 expected at 23.0%.

• Ending community count forecasted at 250–255.