KB Home Sets the Pace: Strong Q4 Performance Amidst Turbulent Housing Market
KB Home, one of the leading homebuilders in the US, has reported an impressive fourth quarter performance amidst a tumultuous housing market. Despite the Southern California fires causing significant damage and disruption to its operations, the company managed to deliver a strong finish to 2024.
In a conference call on January 13, 2025, KB Home's Chairman and Chief Executive Officer Jeff Mezger highlighted the company's achievements in the fourth quarter, which were within its guided range across most key financial metrics. The company reported $2 billion in total revenues, a 17% increase from the same period last year, driven primarily by lower build times and higher deliveries.
"We had a strong finish to our year with fourth quarter performance that was within our guided range across most of our key financial metrics," Mezger said. "Our margins were healthy, expanding to just under 21% in gross and increasing to 11.5% in operating income."
KB Home's earnings per diluted share grew by 36% from last year's fourth quarter, reaching $2.52. The company also returned nearly $120 million of capital to its shareholders during the quarter through share repurchases.
The company's strong performance contributed to a solid financial performance for 2024 as a whole. In the full year, KB Home delivered nearly 14,200 homes, driving total revenues higher to roughly $7 billion and increasing diluted earnings to $8.45 per share. The company's book value expanded 12% from the prior year.
Operationally, KB Home executed well in 2024, opening 106 new communities and selling out of 90. The company also reduced its build time by an average of 28% year-over-year and achieved the highest level of customer satisfaction in its history.
"The housing market is benefiting from solid employment and wage increases," Mezger said. "Demographics have been and we expect will continue to be a significant factor in driving housing demand with the largest generational cohorts, millennial and Gen Z buyers demonstrating a strong desire for homeownership."
Despite rising mortgage rates influencing near-term demand, KB Home generated 2,688 net orders in the fourth quarter, up 41% year-over-year against a soft comparison in the same period last year. The company's cancellation rate remained stable sequentially at historically low levels, indicative of a solid pool of buyers ready and able to close on their homes.
