KB Home (NYSE:KBH) Q2 2018 Earnings Conference Call - Final Transcript

Jun 28, 2018 • 05:00 pm ET


KB Home (NYSE:KBH) Q2 2018 Earnings Conference Call - Final Transcript


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Good afternoon. My name is Devon and I'll be your conference operator for today. I would like to welcome everyone to the KB Home 2018 Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Following the Company's opening remarks we will open the lines for questions. Today's conference call is being recorded and will be available for replay at the Company's website, kbhome.com, through July 5th.

I would now like to turn the call over to Jill Peters, Senior Vice President, Investor Relations. Jill, you may begin.

Jill Peters

Thank you, Devon. Good afternoon everyone and thank you for joining us today to review our results for the second quarter of fiscal 2018. With me are Jeff Mezger, Chairman, President, and Chief Executive Officer; Jeff Kaminski, Executive Vice President and Chief Financial Officer; Matt Mandino, Executive Vice President and Chief Operating Officer; Bill Hollinger, Senior Vice President and Chief Accounting Officer; and Thad Johnson, Senior Vice President and Treasurer.

Before we begin, let me note that during this call, items will be discussed that are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future results and the Company does not undertake any obligation to update them. Due to factors outside of the Company's control, including those detailed in today's press release and in filings with the Securities and Exchange Commission, actual results could be materially different from those stated or implied in the forward-looking statements.

In addition, a reconciliation of the non-GAAP measures referenced during today's discussion to their most directly comparable GAAP measures can be found in today's press release and/or on the Investor Relations page of our website at kbhome.com.

And with that, I will turn the call over the Jeff Mezger.

Jeffrey T. Mezger

Thank you, Jill, and good afternoon. Before I get into the review of our business, I would like to recognize Matt Mandino, whom we recently appointed as our Executive Vice President and Chief Operating Officer. Many of you met Matt at our 2016 Investor Conference as he was transitioning from Division President in Colorado to a Regional President position. Matt's new role in a much broader capacity reflects our rapid growth as we've more than doubled our revenues in just four years, and our expected growth into the future which Matt will help drive as we expand beyond $5 billion in revenues.

Turning to our results for the quarter, we continue to considerably improve our key operating, and financial performance metrics, a multi-year trend, that reflects a larger and increasingly more profitable business. Looking at the specifics of the second quarter, we expanded total revenues by 10% to $1.1 billion, and increased earnings-per-share by more than 70% to $0.57. We've been on a steady path of producing year-over-year gross margin improvement as we rotate into higher-margin communities and begin to realize the benefit of lower interest amortization.

In the second quarter, we expanded our gross margin by 170 basis points