KB Home (NYSE:KBH) Q2 2019 Earnings Conference Call - Final Transcript

Jun 26, 2019 • 05:00 pm ET


KB Home (NYSE:KBH) Q2 2019 Earnings Conference Call - Final Transcript


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Good afternoon. My name is Devon and I will be your conference operator today. I would like to welcome everyone to KB Home 2019 Second Quarter Earnings Conference Call. At this time, all participant lines are in a listen-only mode. Following the Company's opening remarks, we will open the line for questions. Today's conference call is being recorded and will be available for replay at the Company's website, kbhome.com, through July 26.

Now, I will like to turn the call over to Jill Peters, Senior Vice President, Investor Relations. Jill, thank you. 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 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 the Jeff Mezger.

Jeffrey T. Mezger

Thank you, Jill, and good afternoon. We continued to deliver solid performance in the second quarter under our returns-focused growth plan, which prioritizes the profitable growth of our business and greater productivity and efficiency of our assets. Our execution on this plan has been consistent and strong since we launched it in 2016 and has produced measurable results. We have realized significant growth in our community count this year, which fueled a 15% year-over-year increase in our second quarter net orders. In addition, by substantially reducing our debt while growing our active inventory, we expect to lower our annual interest incurred in 2019 by more than $40 million since the plan was introduced.

In the second quarter, we accelerated our community count growth by successfully opening 43 new communities, bringing our total openings over the last 12 months to 123, which had us well positioned for the spring selling season. Our second quarter average community count was up 17% from a year ago, reflecting increases in all four regions, with three of our regions producing greater than 20% growth. We expect to continue growing our average community count year-over-year over the next two quarters and remain committed to