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September 22
1969 - College of the Canyons opens with first class of students in temporary quarters at Hart High School [story]

The bottom line: National L.A.-based homebuilder KB Home, whose current Santa Clarita Valley communities include Canyon Crest, Canyon Heights and Haywood at Five Knolls, posted fourth-quarter profits of 43 cents per share, missing analyst expectations of 50 cents. The company’s per-home profit margin slipped to 22.2 percent, off 50 basis points from the year-ago figure. The company said bad weather in Colorado, New Mexico and Texas in September and October impacted results. Share prices fell by roughly 15 percent after the earnings announcement.


KB's Haywood at Five Knolls

KB’s Haywood at Five Knolls

[Los Angeles, Jan. 7] – KB Home, one of the nation’s largest and most recognized homebuilders, today reported results for its fourth quarter and year ended November 30, 2015. Highlights and developments include the following:


Three Months Ended November 30, 2015

Total revenues grew 24% from the year-earlier quarter to $985.8 million, marking the Company’s 17th consecutive quarter of year-over-year revenue increases.

Housing revenues rose 25% to $979.8 million from $783.5 million in the fourth quarter of 2014, driven by increased delivery volume and a higher overall average selling price.

The Company delivered 2,580 homes, up 16% from 2,229 a year ago, representing its highest number of fourth-quarter deliveries since 2009.

The overall average selling price of $379,800 rose 8% from $351,500 in the year-earlier quarter, reflecting increases in each of the Company’s four regions, including double-digit increases in the Southwest and Central regions.

Land sale revenues totaled $2.3 million, compared to $9.3 million in the fourth quarter of 2014.

Homebuilding operating income increased to $70.4 million from $30.0 million in the corresponding quarter of 2014. The current quarter included $5.1 million of inventory impairment and land option contract abandonment charges, while the year-earlier quarter included $34.2 million of inventory impairment charges.

The Company’s housing gross profit margin of 17.2% improved 100 basis points from the third quarter of 2015 and was essentially flat with the year-earlier quarter. The current quarter housing gross profit margin included approximately 50 basis points of inventory impairment and land option contract abandonment charges.

The Company’s adjusted housing gross profit margin, which excludes the amortization of previously capitalized interest associated with housing operations and housing inventory impairment and land option contract abandonment charges, was 22.2%, representing a 110 basis-point improvement from the third quarter of 2015 and a 50 basis-point decrease from the fourth quarter of 2014. The year-over-year adjusted housing gross profit margin comparison for the current period improved by 180 basis points relative to the year-over-year comparison for the first quarter of 2015.

Selling, general and administrative expenses represented 10.0% of housing revenues, a 190 basis-point improvement compared to the third quarter of 2015 and 50 basis-point improvement from the year-earlier quarter. It was the Company’s lowest fourth-quarter ratio since 2007.

Interest expense of $4.0 million decreased slightly from $4.5 million in the year-earlier quarter, largely due to a higher amount of the Company’s inventory qualifying for interest capitalization.

The Company’s financial services operations generated pretax income of $4.1 million, up from $3.4 million in the fourth quarter of 2014, reflecting an increase in the equity in income from Home Community Mortgage, LLC, the Company’s mortgage banking joint venture.

The Company’s pretax income increased to $69.9 million, its highest fourth-quarter level since 2005 and a 144% increase from the $28.6 million reported in the year-earlier quarter.

Net income totaled $44.0 million, or $.43 per diluted share, versus $852.8 million, or $8.36 per diluted share a year ago. The 2014 fourth-quarter result reflected the Company’s reversal of $825.2 million of its deferred tax asset valuation allowance.

Income tax expense for the current quarter was $25.9 million and represented an effective tax rate of 37.0%. The income tax benefit of $824.2 million in the year-earlier quarter included the impact of the deferred tax asset valuation allowance reversal.


Twelve Months Ended November 30, 2015

Total revenues increased to $3.03 billion, up 26% from $2.40 billion in the year-earlier period.

Housing revenues rose 23% to $2.91 billion from $2.37 billion in 2014.

Homes delivered increased 14% to 8,196, compared to 7,215 a year ago.

The overall average selling price of $354,800 rose 8% from $328,400 in the prior year.

Land sale revenues increased to $112.8 million from $20.0 million in 2014.

Homebuilding operating income of $138.6 million rose 20% from $116.0 million in 2014.

Pretax income increased 34% to $127.0 million, up from $94.9 million a year ago.

Net income totaled $84.6 million, or $.85 per diluted share, compared to $918.3 million, or $9.25 per diluted share in 2014.

Income tax expense totaled $42.4 million and represented an effective tax rate of 33.4% in 2015. The effective tax rate reflects the favorable impact of federal energy tax credits the Company earned from building energy efficient homes. The Company’s income tax benefit of $823.4 million in 2014 reflected the impact of the deferred tax asset valuation allowance reversal.


Backlog and Net Orders

The dollar value of homes in backlog grew 40% to $1.28 billion at November 30, 2015 from $914.0 million at November 30, 2014, reflecting substantial increases in each of the Company’s four regions. These increases ranged from 15% in the West Coast region to 104% in the Southwest region.

The number of homes in backlog at November 30, 2015 increased 36% to 3,966, compared to 2,909 a year ago.

The Company’s ending backlog, in terms of both homes and value, reached its highest fourth-quarter level since 2007.

The value of the Company’s fourth-quarter net orders increased 15% to $675.8 million from $587.4 million in the year-earlier quarter. The Company’s net order value has now increased year over year for 15 consecutive quarters.

Each of the Company’s four regions produced year-over-year growth in net order value, ranging from 8% in the West Coast region to 30% in the Southeast region.

Net orders for the current quarter grew 10% to 1,882, compared to 1,706 in the year-earlier quarter.

The cancellation rate as a percentage of gross orders improved to 32% from 37% for the fourth quarter of 2014, and as a percentage of beginning backlog improved to 19% versus 29% a year ago.

The Company’s overall average community count for the fourth quarter increased 17% to 250, compared to 214 for the year-earlier quarter. At November 30, 2015, the Company had 247 communities open for sales, up 9% from 227 communities a year ago.

Net order value for the year rose 26% from the previous year, reflecting a 22% increase in net orders to 9,253, the Company’s highest annual net orders since 2007.


Balance Sheet

Cash, cash equivalents and restricted cash totaled $568.4 million at November 30, 2015 and $383.6 million at November 30, 2014.

Inventories increased to $3.31 billion at November 30, 2015 from $3.22 billion at November 30, 2014, reflecting the Company’s investments in land acquisition and development during 2015.

The Company’s investments in land acquisition and development totaled $967.2 million in 2015 and $1.47 billion in 2014.

At November 30, 2015, the Company owned or controlled 47,399 lots, of which 38,060 lots were owned and 9,339 lots were controlled under land option contracts.

Notes payable totaled $2.63 billion at November 30, 2015, compared to $2.58 billion at November 30, 2014.

The Company had no cash borrowings outstanding under its unsecured revolving credit facility as of November 30, 2015.

The Company’s ratio of debt to capital was 60.8% as of November 30, 2015 and 61.8% as of November 30, 2014. The ratio of net debt to capital was 54.9% at November 30, 2015 and 57.9% at November 30, 2014.


Management Comments

“Our fourth-quarter results represent a strong finish to a successful year for KB Home, where we generated substantial improvement in many key metrics, including our highest fourth-quarter pretax income since 2005,” said Jeffrey Mezger, president and chief executive officer. “In 2015, we achieved measurable growth and profitability, advanced our core strategies and continued to invest in our operating platform. Of particular importance, we effectively targeted and executed on key initiatives that accelerated our revenues and earnings in the second half of the year and produced sequential improvement in our housing gross profit margin as 2015 progressed.”

“While inclement weather and trade shortages in certain markets tempered our fourth-quarter deliveries and revenues, we have a positive rhythm in our business and substantial momentum as we enter 2016,” continued Mezger. “With our higher backlog giving us strong visibility for potential future deliveries and revenues, and housing market conditions expected to remain generally healthy, we believe we are well-positioned strategically, financially and operationally for further success in 2016. As we move forward, we will remain focused on executing on our strategy, providing an outstanding customer experience, and creating stockholder value.”


About KB Home

KB Home is one of the largest and most recognized homebuilders in the United States and an industry leader in sustainability, building innovative and highly energy- and water-efficient new homes. Founded in 1957 and the first NYSE-listed homebuilder (ticker symbol: KBH), the company has built nearly 600,000 homes for families from coast to coast. Distinguished by its personalized homebuilding approach, KB Home lets each buyer choose their lot location, floor plan, décor choices, design features and other special touches that matter most to them. To learn more about KB Home, call 888-KB-HOMES, visit www.kbhome.com or connect on Facebook.com/KBHome or Twitter.com/KBHome.

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