KB Home forecast fourth-quarter housing revenues of $1.45 billion to $1.65 billion on 3,000 to 3,500 homes delivered, while planning up to $50 million of share repurchases in the quarter. The builder reported third-quarter housing revenues of $1.3 billion, down 20% from $1.6 billion a year earlier, with net income of $65 million and diluted earnings per share of $1.05 on 2,732 deliveries. Adjusted housing gross profit margin was 16.8%, up sequentially from 15.7% in the second quarter, but the company now expects fourth-quarter housing gross profit of 16% to 16.6% and full-year housing gross profit of 16% to 16.2%, both assuming no inventory charges, with fourth-quarter gross margin about 1 percentage point lower than prior guidance implied. For the full year, KB Home narrowed its housing revenue range to $4.9 billion to $5.1 billion on 10,500 to 11,000 homes delivered, and said the midpoint of its fourth-quarter guidance implies an average selling price of approximately $480,000 versus roughly $500,000 previously implied. Executive Chairman Jeffrey Mezger said the housing market remains challenging and has weakened since the June earnings call, while CEO Rob McGibney said the company's Built to Order model, which represented nearly three quarters of third-quarter deliveries, was designed to perform in exactly these conditions.
KB HomeQ4 gross margin guidance cut ~1pt below prior implied and ASP down to ~$480k from ~$500k, with Q3 revenue down 20% YoY.
