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Exhibit 99.1
[KB HOME PRESS RELEASE LOGO]
FOR RELEASE, THURSDAY, JUNE 19, 2003 FOR FURTHER INFORMATION CONTACT:
- ------------------------------------ --------------------------------
2:30 PM PACIFIC DAYLIGHT TIME James Gonzalez, Investor Relations
(310) 231-4033 or jagonzalez@kbhome.com
Kate Mulhearn, Media Contact
(310) 231-4147 or kmulhearn@kbhome.com
KB HOME REPORTS RECORD SECOND QUARTER RESULTS; RAISES EPS ESTIMATES
REVENUES OF $1.44 BILLION, UP 26%; EPS IMPROVES 37% TO $1.94
BACKLOG UP 29% TO $3.40 BILLION; FULL YEAR EPS ESTIMATE RAISED TO $8.20
Los Angeles, CA, June 19, 2003 - KB Home (NYSE: KBH), one of the largest
homebuilders in the United States and France, today announced record financial
results for its second quarter ended May 31, 2003. Highlights include:
- - The Company's total revenues in the second quarter of 2003 rose to $1.44
billion, the highest level for any second quarter in the Company's
history, increasing 26% from $1.14 billion in 2002. The record top-line
growth stemmed primarily from higher housing and commercial revenues.
- - Total operating income for the Company increased 30% to a record $132.4
million in the second quarter of 2003 from $102.1 million in the same
quarter of 2002. Construction operating income increased 40% to $122.3
million in the second quarter of 2003 from $87.3 million in 2002, while
the operating margin rose 80 basis points to 8.6%. These improvements
reflected a year-over-year increase of 140 basis points in the housing
gross margin to 21.8% in 2003.
- - Net income increased 27% to a new second quarter record of $81.4 million
in 2003 from $64.1 million in the second quarter of 2002. Diluted earnings
per share also reached an all-time second quarter high of $1.94 in 2003,
increasing 37% from the previous high of $1.42 per diluted share recorded
in the second quarter of 2002. The Company's diluted average shares
outstanding decreased approximately 7% in the second quarter of 2003 from
the year-earlier quarter due to share repurchases made by the Company. The
Company repurchased a total of 1.25 million of its common shares at an
aggregate price of $59.6 million during the first six months of 2003,
including 750,000 shares repurchased in the second quarter.
- - Company-wide net orders for the quarter ended May 31, 2003 totaled 8,397
and established a new record for the most net orders posted in any single
quarter in the Company's history. Second quarter net orders rose 17% from
the 7,195 net orders recorded for the same quarter of 2002. The Company's
West Coast region net orders strengthened from the first quarter of 2003,
while net orders in the Company's Southwest and Southeast regions also
continued their favorable trend.
5
- - Backlog at May 31, 2003, in terms of both units and dollars, was the
highest of any quarter-end in the Company's history. Revenues in backlog
at May 31, 2003 totaled approximately $3.40 billion, up 29% from the same
period of 2002, providing a solid foundation for the Company's 2003 fiscal
year projections. The Company's backlog at May 31, 2003 stood at 16,103
units, which was up 2,362 units or 17% from 13,741 at May 31, 2002.
"With revenue growth of 26% and a diluted earnings per share increase of
37%, the Company generated strong second quarter results reflecting its proven
operating strategy and a housing business environment supported by the continued
downshift in mortgage rates and strong price appreciation," said Bruce Karatz,
chairman and chief executive officer. "For the remainder of 2003, we expect to
continue to benefit from favorable housing market conditions, including the
combination of healthy demand and constrained land supply, and will continue to
leverage our size to generate further operating efficiencies in the future."
Total revenues for the second quarter of 2003 amounted to $1.44 billion,
up 26% from the year-earlier quarter. In the second quarter of 2003, housing
revenues rose 22% to $1.35 billion from $1.11 billion in the year-earlier
quarter reflecting higher unit delivery volume and higher average selling
prices. Unit deliveries increased 5% to 6,344 in the second quarter of 2003 from
6,052 in the same quarter of 2002, while the Company's overall average selling
price rose 15% to $212,200 in 2003 from $184,300 in 2002. The year-over-year
growth in the Company's average selling price in 2003 reflected increases in all
of the Company's geographic regions except the Southeast, where the Company's
expansion into Raleigh, Charlotte and Atlanta, with the acquisition of Colony
Homes completed during the second quarter, resulted in a lower average selling
price. Commercial revenues rose to $73.1 million for the quarter ended May 31,
2003 from $9.2 million in the same quarter of 2002 primarily due to the sale of
an office building by the Company's French commercial business.
Net income rose to $81.4 million in the second quarter of 2003 from $64.1
million in the second quarter of 2002, mainly from construction activities as
the combination of higher unit delivery volume and operating margin drove the
Company's net income to a new second quarter record. Construction pretax income
for the second quarter increased 38% to $111.3 million in 2003 from $80.9
million in the year-earlier quarter, reflecting an 80 basis-point improvement in
operating margin to 8.6%. The Company's housing gross margin rose 140
basis-points to 21.8% for the three months ended May 31, 2003 compared to 20.4%
for the same period of 2002, mainly due to price increases in the Company's West
Coast region and the strength of the markets in which the Company operates.
With more than two quarters of projected 2003 deliveries in backlog at May
31, 2003, the Company's backlog value reached approximately $3.40 billion
compared to $2.64 billion at May 31, 2002. "Our 8,397 net orders for the second
quarter were the highest for any quarter in our history and contributed greatly
to our backlog value improving 29% on a year-over-year basis and establishing a
new Company record," said Karatz.
"With the solid results we posted in the first half of 2003 and the backlog
supporting our projections for the remainder of the year, we are cautiously
optimistic. Therefore, we have raised our earnings per share estimate for 2003
to $8.20."
6
While promoting the growth of its business, the Company continued to
effectively manage its financial leverage. The Company's financial structure at
May 31, 2003 compared favorably to earlier periods as the ratio of debt to total
capital at May 31, 2003 improved 150 basis-points to 48.7% from 50.2% at
February 28, 2003 and was lower than the 49.9% ratio at May 31, 2002. "The
improvement in the Company's leverage reflects our commitment to maintaining a
balanced approach to managing the Company's financial resources," Karatz
commented. "During the second quarter, we completed the acquisition of Colony
Homes, invested in the growth of our existing operations and repurchased shares
of the Company's common stock -- all without significantly adding to debt. The
financial flexibility we continue to maintain has given us the opportunity to
actively pursue our strategic goals."
For the six months ended May 31, unit deliveries totaled 11,607 in 2003
and 11,133 in 2002. Total revenues for the first half of 2003 totaled $2.54
billion, up 23% from $2.06 billion for the same period of 2002. Net income for
the six months ended May 31, 2003 rose 26% to $134.2 million from $106.7 million
for the first six months of 2002, while diluted earnings per share increased 35%
to $3.19 from $2.36 in 2002.
THE CONFERENCE CALL ON THE SECOND QUARTER 2003 EARNINGS WILL BE BROADCAST LIVE
TOMORROW AT 8:00 AM PACIFIC DAYLIGHT TIME, 11:00 AM EASTERN DAYLIGHT TIME. TO
LISTEN, PLEASE GO TO THE INVESTOR RELATIONS SECTION OF THE COMPANY'S WEB SITE AT
WWW.KBHOME.COM.
KB Home is one of America's premier homebuilders with domestic operating
divisions in the following regions and states: West Coast -- California;
Southwest -- Arizona, Nevada and New Mexico; Central -- Colorado and Texas; and
Southeast -- Florida, Georgia and North Carolina. Kaufman & Broad S.A., the
Company's majority-owned subsidiary, is one of the largest homebuilders in
France. In fiscal 2002, the Company delivered 25,565 homes in the United States
and France. It also operates KB Home Mortgage Company, a full-service mortgage
company for the convenience of its buyers. Founded in 1957, KB Home is a Fortune
500 company listed on the New York Stock Exchange under the ticker symbol "KBH."
For more information about any of KB Home's new home communities, call
1-888-KB-HOMES or visit the Company's Web site at www.kbhome.com.
Except for the historical information contained herein, certain matters
discussed in this press release are "forward-looking statements" as defined in
the Private Securities Litigation Reform Act of 1995, including any statements
concerning future financial performance, business and prospects, and future
Company actions and their expected results. These forward-looking statements are
subject to risks, uncertainties and assumptions including, but not limited to,
the continued impact of terrorist activities and U.S. response, accelerating
recessionary trends and other adverse changes in general economic conditions,
material prices, labor costs, interest rates, the secondary market for loans,
consumer confidence, competition, currency exchange rates (insofar as they
affect the Company's operations in France), environmental factors, government
regulations affecting the Company's operations, the availability and cost of
land in desirable areas, unanticipated violations of Company policy,
unanticipated legal proceedings, and conditions in the capital, credit and
homebuilding markets. See the Company's Annual Report on Form 10-K and its
Annual Report to Shareholders for the year ended November 30, 2002 and its other
filings for a further discussion of these and other risks and uncertainties
applicable to the Company's business.
# # #
(TABLES FOLLOW)
# # #
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KB HOME
CONSOLIDATED STATEMENTS OF INCOME
For the Six Months and Three Months Ended May 31, 2003 and 2002
(In Thousands, Except Per Share Amounts - Unaudited)
Six Months Three Months
---------------------------- ----------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
TOTAL REVENUES $ 2,535,054 $ 2,055,319 $ 1,440,104 $ 1,139,654
=========== =========== =========== ===========
CONSTRUCTION:
Revenues 2,502,312 2,015,856 1,420,886 1,116,645
Costs and expenses (2,293,329) (1,865,467) (1,298,624) (1,029,306)
----------- ----------- ----------- -----------
Operating income 208,983 150,389 122,262 87,339
Interest income 1,473 2,583 715 884
Interest expense, net of
amounts capitalized (15,998) (14,941) (5,552) (6,342)
Minority interests (8,695) (4,287) (6,620) (2,428)
Equity in pretax income of
unconsolidated joint ventures 689 2,598 521 1,440
----------- ----------- ----------- -----------
Construction pretax income 186,452 136,342 111,326 80,893
----------- ----------- ----------- -----------
MORTGAGE BANKING:
Revenues:
Interest income 8,063 11,149 3,608 5,671
Other 24,679 28,314 15,610 17,338
----------- ----------- ----------- -----------
32,742 39,463 19,218 23,009
Expenses:
Interest (3,838) (5,557) (1,668) (2,565)
General and administrative (15,043) (10,922) (7,402) (5,675)
----------- ----------- ----------- -----------
Mortgage banking pretax income 13,861 22,984 10,148 14,769
----------- ----------- ----------- -----------
TOTAL PRETAX INCOME 200,313 159,326 121,474 95,662
Income taxes (66,100) (52,600) (40,100) (31,600)
----------- ----------- ----------- -----------
NET INCOME $ 134,213 $ 106,726 $ 81,374 $ 64,062
=========== =========== =========== ===========
BASIC EARNINGS PER SHARE $ 3.36 $ 2.50 $ 2.05 $ 1.50
=========== =========== =========== ===========
DILUTED EARNINGS PER SHARE $ 3.19 $ 2.36 $ 1.94 $ 1.42
=========== =========== =========== ===========
BASIC AVERAGE SHARES OUTSTANDING 39,896 42,673 39,622 42,696
=========== =========== =========== ===========
DILUTED AVERAGE SHARES
OUTSTANDING 42,139 45,131 41,979 45,175
=========== =========== =========== ===========
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KB HOME
SUPPLEMENTAL INFORMATION
For the Six Months and Three Months Ended May 31, 2003 and 2002
(Unaudited)
Six Months Three Months
------------------------- -------------------------
CONSTRUCTION REVENUES: 2003 2002 2003 2002
------------------------- -------------------------
Housing $2,407,992 $2,000,827 $1,346,336 $1,107,002
Commercial 90,392 12,771 73,109 9,187
Land 3,928 2,258 1,441 456
---------- ---------- ---------- ----------
Total $2,502,312 $2,015,856 $1,420,886 $1,116,645
========== ========== ========== ==========
Six Months Three Months
------------------------- -------------------------
COSTS AND EXPENSES: 2003 2002 2003 2002
---------- ---------- ---------- ----------
Construction and land costs $1,958,916 $1,607,600 $1,110,887 $ 887,799
Selling, general and
administrative expenses 334,413 257,867 187,737 141,507
---------- ---------- ---------- ----------
Total $2,293,329 $1,865,467 $1,298,624 $1,029,306
========== ========== ========== ==========
Six Months Three Months
--------------------- ---------------------
AVERAGE SALES PRICES: 2003 2002 2003 2002
-------- -------- -------- --------
West Coast $352,700 $300,300 $356,400 $299,800
Southwest 175,600 173,300 179,700 175,000
Central 150,700 144,900 152,300 145,800
Southeast 158,500 168,700 155,300 165,600
France 200,500 149,600 234,900 157,000
-------- -------- -------- --------
Total $207,500 $181,400 $212,200 $184,300
======== ======== ======== ========
Six Months Three Months
----------------- ---------------
NET ORDERS: 2003 2002 2003 2002
------ ------ ----- -----
West Coast 3,253 3,589 1,898 1,892
Southwest 3,969 3,034 2,015 1,522
Central 3,976 4,768 2,023 2,467
Southeast 1,770 313 1,346 196
France 1,978 1,931 1,115 1,117
------ ------ ----- -----
Total 14,946 13,635 8,397 7,194
====== ====== ===== =====
UNCONSOLIDATED JOINT VENTURES: -- 14 -- 1
====== ====== ===== =====
Six Months Three Months
----------------- ---------------
UNIT DELIVERIES: 2003 2002 2003 2002
------ ------ ----- -----
West Coast 2,424 2,015 1,263 1,152
Southwest 2,954 2,658 1,579 1,412
Central 3,224 4,479 1,624 2,413
Southeast 1,295 268 954 152
France 1,710 1,610 924 876
------ ------ ----- -----
Total 11,607 11,030 6,344 6,005
====== ====== ===== =====
UNCONSOLIDATED JOINT VENTURES: -- 103 -- 47
====== ====== ===== =====
May 31, 2003 May 31, 2002
--------------------- ---------------------
BACKLOG DATA: Backlog Backlog Backlog Backlog
Units Value Units Value
------ ---------- ----- ----------
West Coast 3,209 $1,117,856 3,217 $ 977,628
Southwest 3,810 685,870 2,927 512,544
Central 4,411 659,443 4,884 720,447
Southeast 2,240 364,279 371 61,586
France 2,433 571,755 2,333 365,147
------ ---------- ------ ----------
Total 16,103 $3,399,203 13,732 $2,637,352
====== ========== ====== ==========
UNCONSOLIDATED JOINT VENTURES: -- $ -- 9 $ 1,809
====== ========== ====== ==========
9