KB Home (NYSE:KBH) Q1 2019 Earnings Conference Call Transcript
Mar 26, 2019 • 05:00 pm ET
Good afternoon. My name is Devon, and I will be your conference operator today. I would like to welcome everyone to the KB Home 2019 First Quarter Earnings Conference Call. At this time, all participants lines 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 April 26.
Now, I would like to turn the call over to Jill Peters, Senior Vice President, Investor Relations. Jill, you may begin.
Thank you, Devon. Good afternoon, everyone, and thank you for joining us today to review our results for the first quarter of fiscal 2019. 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 to Jeff Mezger.
Jeffrey T. Mezger
Thank you, Jill, and good afternoon. We had a solid start to 2019 with first quarter results that reflected continued execution on our Returns-Focused Growth Plan, particularly in our balanced approach to allocating the significant cash flow we have generated to achieve our objectives. We made considerable progress in three key areas, continued to expand our gross profit margin, further strengthening our capital structure and realizing growth in our community count.
Our capital allocation priorities have been very consistent since the start of our plan in 2016: Investing in our future growth and reducing our debt. In just over two years, while continuing to invest in land acquisition and development, we also repaid over $800 million of debt, which has meaningfully reduced the amount of interest incurred per home and created a tailwind for our gross margin. In the first quarter, this interest reduction benefited our gross margin by a full percentage point year-over-year.
During the quarter, we repaid the $230 million that was due on our convertible notes, decreasing our diluted share count by 8.4 million shares, which will benefit our earnings per share this year. Our debt-to-capital ratio in the first quarter was down about 500