Post Earnings Coverage as KB Home's Revenue Surged 21%
Upcoming AWS Coverage on D.R. Horton Post-Earnings Results
LONDON, UK / ACCESSWIRE / January 13, 2017 / Active Wall St. announces its post-earnings coverage on KB Home (NYSE: KBH). The Company released its fourth quarter and fiscal 2016 results on January 11, 2017. The homebuilder outperformed top- and bottom-line expectations. Register with us now for your free membership at: http://www.activewallst.com/register/.
One of KB Home's competitors within the Residential Construction space, D.R. Horton, Inc. (NYSE: DHI), announced on December 21, 2016, that it will release financial results for its first fiscal quarter ended December 31, 2016 on Tuesday, January 24, 2017 before the market opens. AWS will be initiating a research report on D.R. Horton in the coming days.
Today, AWS is promoting its earnings coverage on KBH; touching on DHI. Get our free coverage by signing up to:
http://www.activewallst.com/registration-3/?symbol=KBH
http://www.activewallst.com/registration-3/?symbol=DHI
Earnings Reviewed
For the three months ended November 30, 2016, KB Home's total revenues of $1.19 billion increased 21% compared to total revenue of $985.78 million, with housing revenues also up 21% to $1.19 billion, while financial services were $3.31 million. During Q4 FY16, the Company's deliveries grew 19% on a y-o-y basis to 3,060 homes, and a 2% rise in overall average selling price to $387,400. All four of the Company's home building regions generated y-o-y increases in housing revenues, with three of its regions posting double-digit growth. The largest y-o-y increase occurred in the Company's West Coast region, where housing revenues were up 30%.
During Q4 FY16, KB Home's Homebuilding operating income decreased 20% to $56.0 million, reflecting total inventory-related charges of $36.1 million compared to $5.1 million in the prior year's same period. Homebuilding operating income margin was 4.7%. Excluding total inventory-related charges, homebuilding operating income margin was 7.7%.
Land sale losses of $30.4 million included $30.6 million of inventory impairment charges related to planned future land sales. For Q4 FY16, the Company's net income slipped to $37.5 million from $44 million in the year earlier comparable period. On a per-share basis, earnings declined to $0.40 per share from $0.43 per share in Q4 FY15.
KB Home's results were still narrowly stronger than expected, with analysts having expected revenue of $1.15 billion and earnings per diluted share of $0.39 per share.
FY16 Results
For FY16, KB Home's total revenues increased 19% to $3.59 billion. Land sale revenues totaled $7.4 million compared to $112.8 million in FY15. The Company's Housing revenues grew 23% to $3.58 billion. While deliveries rose 20% to 9,829 homes. During FY16, KB Home's average selling price increased 3% to $363,800. Homebuilding operating income rose 10% to $152.4 million. For FY16, the Company's net income grew 25% to $105.6 million, and earnings increased 32% to $1.12 per diluted share from $.85 per diluted share.
Backlog and Net Orders
For Q4 FY16, KB Home's net orders increased 20% to 2,254, and net order value grew 27% to $855.9 million. The Company's Homes in backlog as of November 30, 2016, rose 11% to 4,420. Ending backlog value grew 19% to $1.52 billion, with double-digit increases in three of the Company's four regions.
The cancellation rate as a percentage of beginning backlog for Q4 FY16 improved to 15% from 19%, and as a percentage of gross orders improved to 25% from 32% in Q4 FY15. Average community count for the reported quarter decreased 8% to 231.
Balance Sheet
As of November 30, 2016, KB Home's cash and cash equivalents increased to $592.1 million compared to $559.0 million as on November 30, 2015. At the end of Q4 FY16, the Company's inventories were $3.40 billion, with investments in land acquisition and development totaling $1.36 billion for the year ended November 30, 2016. Lots owned or controlled totaled 44,825, of which 79% were owned.
In FY16, the Company repurchased nearly 8.4 million shares of its common stock at a total cost of $85.9 million, while improving its ratio of debt to capital to 60.5% and its ratio of net debt to total capital to 54.3%.
The Company elected to exercise its optional redemption rights under the terms of its 9.100% Senior Notes due 2017, which mature on September 15, 2017. On January 13, 2017, the Company will redeem $100.0 million in aggregate principal amount of the notes using internally generated cash. In connection with this early extinguishment of debt, the Company will recognize a charge of approximately $5.4 million in Q1 FY17.
Outlook
For Q1 FY17, KB Home expects to generate housing revenues in the range of $760 million to $820 million. For FY 16, the Company anticipates housing revenues in the range of $3.8 billion to $4.2 billion. For Q1 FY17, the Company is projecting its overall average selling price to be in the range of $360,000 to $365,000.
Stock Performance
On Thursday, the stock closed the trading session at $16.65, slightly climbing 0.30% from its previous closing price of $16.60. A total volume of 9.99 million shares have exchanged hands, which was higher than the 3-month average volume of 2.30 million shares. KB Home's stock price advanced 2.30% in the past six months, and 64.62% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have gained 5.31%. The stock is trading at a PE ratio of 14.53 and has a dividend yield of 0.60%.
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