KB Home Reports 10% Revenue Growth, 5% Net Income Increase in Q3 2024

KB Home reported a strong performance for the third quarter and nine months ended August 31, 2024, with total revenues reaching $1.75 billion, a 10% increase from $1.59 billion in the same period of 2023. For the nine-month period, revenues totaled $4.93 billion, up from $4.74 billion year-over-year. Homebuilding revenues specifically rose to $1.75 billion for the quarter, an 11% increase from $1.58 billion in the prior year, and $4.91 billion for the nine months, compared to $4.72 billion in 2023.

Net income for the third quarter was $157.3 million, reflecting a 5% increase from $149.9 million in the same quarter of 2023. For the nine months, net income rose to $464.4 million from $439.9 million. Diluted earnings per share also saw a notable increase, reaching $2.04 for the third quarter, up 13% from $1.80 in the previous year.

The company’s homebuilding operating income for the third quarter was $189 million, a 5% increase from $179.2 million in 2023. However, the homebuilding gross profit margin decreased to 20.6% from 21.5% year-over-year, attributed to rising construction and land costs. The average selling price of homes delivered increased to $480,900, a 3% rise from the previous year.

In terms of strategic developments, KB Home invested $2.10 billion in land and land development during the nine months, a significant 59% increase from the prior year. The company also repurchased 3.46 million shares for $250 million, representing about 5% of shares outstanding at the start of the fiscal year. As of August 31, 2024, total liquidity stood at $1.46 billion, including cash and cash equivalents of $374.9 million.

The company’s financial services segment also performed well, with pretax income for the third quarter increasing to $207.4 million, up from $194.5 million in the same period last year. The financial services segment's total pretax income for the nine months was $603.2 million, compared to $571.7 million in 2023.

Despite these positive results, KB Home faced challenges, including a 14% decrease in the ending backlog value year-over-year, totaling approximately $2.92 billion. The company reported a flat net order pace compared to the previous year, influenced by fluctuating demand and economic concerns, particularly due to elevated mortgage interest rates.

Overall, KB Home's performance reflects a robust growth trajectory in revenues and profitability, alongside strategic investments in land and share repurchases, while navigating a challenging market environment.