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

Jun 26, 2019 • 05:00 pm ET

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

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Presentation
Executive
Jeff Kaminski

of 45.8% improved by 930 basis points as compared to the second quarter of last year, reflecting a $280 million increase in stockholders' equity combined with $500 million of debt reduction. As we continue to drive improvements in our credit metrics, we have tightened once again our leverage objective from a 35% to 45% net debt-to-capital target to a debt-to-capital ratio within that same range. While our quarter-end ratio was just above the upper limit of our revised target range, we expect our debt-to-capital ratio to be within this range by year-end.

Along with our return of capital to shareholders in the form of our quarterly dividend, our capital allocation priorities remain consistent with a focus on investment in land assets to grow the business and improve returns, and continue deleveraging the balance sheet to retain earnings growth enhanced by future debt reduction.

In summary, our second quarter highlights included a strong backlog conversion rate driving over $1 billion in housing revenues, a measurable increase in community count and a healthy sales pace per community contributing to a 15% year-over-year increase in net orders, a sequential expansion of operating margin and a significant improvement in our debt-to-capital ratio to 45.8%. We believe that our expanded community count and solid quarter-end backlog value position us to achieve growth in housing revenues and improvement in both our gross and operating margins during the second half of this year.

We will now take your questions. Devon, please open the lines.