Housing Bubble
KB Home reports record 2002 revenues of $5.03 billion
KB Home, one of the largest homebuilders in the United States and France, announced record financial results for its fourth quarter and fiscal year ended November 30, 2002.
Total revenues for the year ended November 30, 2002 exceeded $5 billion for the first time in the Company's history, reflecting an increase of 10% from 2001 revenues of $4.57 billion. For the fourth quarter of 2002, total revenues reached a record $1.68 billion, up 16% from the $1.45 billion generated in the corresponding quarter of 2001, and reflected the highest revenues for any quarter in the Company's history.
Total operating income jumped 32% to $510.4 million in 2002 from $386.1 million in 2001. As a percent of revenues, the operating margin rose 170 basis points to 10.1% in 2002 from 8.4% in 2001.
"We are very pleased to announce our record results for the fourth quarter and fiscal year ended November 30, 2002," said Bruce Karatz, chairman and chief executive officer. "We achieved new fourth quarter and full year revenues and earnings records and beat Wall Street's earnings expectations. The increase in our community counts and continued expansion of our operating margins in the fourth quarter provided a strong finish to our fiscal year."
Unit deliveries for the fourth quarter of 2002 totaled 7,932 versus 7,883 units in the same quarter of 2001. Housing revenues for the fourth quarter of 2002 rose approximately 15% to $1.60 billion from $1.40 billion in the year-earlier quarter primarily due to the Company's average selling price increasing 13% to $202,000 in 2002 from $178,800 in 2001. Selling prices were higher in all of the Company's geographic regions, with the strongest increase occurring in the West Coast region where continued statewide shortages of housing in California contributed to an 18% increase in the average sales price compared to the year-earlier quarter.
Construction pretax income for the fourth quarter increased nearly 40% to $166.8 million in 2002 from $119.5 million in the year-earlier quarter as a result of a significant improvement in operating margin, which increased 160 basis points to 11.1%. Contributing to the increase in operating margin was the Company's housing gross margin, which rose 180 basis points to 22.6% for the three months ended November 30, 2002 from 20.8% for the same period of 2001. The increase reflects operating efficiencies as well as price increases in select markets.
The Company's mortgage banking operations generated pretax income of $17.9 million in the fourth quarter of 2002, up 23% from $14.5 million in 2001. An increase in average loan size and a more favorable interest rate spread drove the quarter over quarter improvement.
"Our backlog value at November 30, 2002 improved 23% to approximately $2.35 billion and established a new year-end record," said Karatz. "This improvement in backlog entering 2003 allows for good visibility in forecasting revenues and profit expectations for the first half of 2003."
For the year ended November 30, 2002, unit deliveries totaled 25,565 compared to 24,868 for the same period of 2001. The Company's total revenues for the year reached a record $5.03 billion and increased 10% from total revenues of $4.57 billion for fiscal year 2001. Net income for the year ended November 30, 2002 totaled $314.4 million, up 47% from $214.2 million for 2001 and earnings per diluted share for the year was $7.15, up 30% from $5.50 for the prior year.
"The compound annual growth of 38% in our diluted earnings per share over the past five years provides compelling evidence that our sustained focus on improving the quality of our business, at all levels of the enterprise, continues to deliver tangible and quantifiable results," Karatz commented. "In 2002, our core operations generated ample free cash flow which allowed us to organically increase our community counts, expand our market presence with acquisitions in Florida and Arizona and repurchase 4 million shares of our common stock. Provided that general market conditions remain stable, our sound financial position at November 30, 2002, including approximately $330 million in cash, a $644 million unused bank revolver and a 17% return on our invested capital, have us poised for another strong year in 2003."
Source: KB Home
Domestic operating divisions: West Coast -- California; Southwest -- Arizona, Nevada and New Mexico; and Central -- Colorado, Texas and Florida.
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