Post on 31-May-2020
EVOLUTION & REVOLUTION OF OUR BUSINESS
Jeff Mezger, Chairman of the Board, President and CEO
© 2016 KB Home 2
Key Messages for Today
Enduring History
Evolution and Revolution
Macroeconomics
Expectations
2
© 2016 KB Home 3
Enduring History
Delivered 578,543 homes since our founding in 1957
Geographically diverse with operations in 36 markets
Focus on first-time and first move-up buyer segments
Built-to-Order™ strategy
Industry leader known for innovation & sustainability
© 2016 KB Home 4
Not Just Another Homebuilder
What makes us different, makes us better
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© 2016 KB Home 5
Evolution and Revolution
Disciplined business practices drive incremental change
Quality and operational excellence, supported by strong partnerships
Consumer-focused innovation
Revolutions – ask “why not?”
© 2016 KB Home 6
Evolution and Revolution in Action
Evolution Brand recognition
Inspired designs
Amazing selection
Great value
5,000 Solar Powered Homes
10,000 Water SmartHomes
100,000 Energy Star Homes
120+ LEED Platinum Homes
Revolution
Questioning assumptions
Looking for new opportunities
Disruptive technologies
Partnering on Give Me 2 ideas
Engage | Develop | Participate
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Prototype the Future
© 2016 KB Home 8
The Sustainable DIFFERENCE™
8582
7875
72
6865
62
2007 2008 2009 2010 2011 2012 2013 2014 2015
60
KB Home
National Average HERS Score
The average new KB home is 40% more energy efficient than a typical new home, and 70% more efficient than a typical resale home
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Economic Indicators
Legend
Healthy
Caution
Concern
Economic Growth (GDP)
1.4% (Q2 2016)
Unemployment Rate
5.0% (September 2016)
Inflation
1.1% CPI (Annual Rate)
Mortgage Rates
3.48% (September 2016)
Consumer Confidence
Index 104.1 (September 2016)
[ - ]
[ ~ ]
[ ~ ]
[ + ]
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Housing Affordability
Index 157 vs. 100 (Norm)
Housing Starts
1.14M units annualized (Up 1% YOY)
Existing Home Sales
5.33M units annualized (Up 1% YOY)
New Home Sales
609K units annualized (Up 21% YOY)
Existing Homes Inventory
4.6 months vs. 6.0 (Norm)
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Macro Housing
© 2016 KB Home 10
2016 JCHS Household Projections
Source: JCHS Policy Advisory Board. Mr. Daniel McCue’s presentation.
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2016 JCHS Household Projections
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Consumer Confidence Index
12
20
40
60
80
100
120
140
160
In September, Consumer Confidence Rose to its Highest Level Since August 2007, a Favorable Indicator
For Future Homebuyer Demand
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Housing Affordability Index
13
95
105
115
125
135
145
155
165
175
185
195
205
215
225
Affordability Remains Attractive Despite Reaching a Seven-Year Low Due to the Widening Gap Between
Rising Home Prices and Wage Growth
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Single-Family Existing Home Sales
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2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
6,500
Existing Home Sales Decreased Year Over Year for the First TimeSince November 2015, Due to the Low Supply of Affordable Homes
(in thousands)
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New Single-Family Home Sales
15
150
325
500
675
850
1,025
1,200
1,375
New Home Sales were 21% Higher than a Year Ago,Still Well Below Historical Levels
(in thousands)
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Existing and New Home Inventory
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Third Quarter 2016 Highlights
Steadily improving financial performance with gains across key operational and financial measures
Housing revenues up 14%, driven by an 11% increase in deliveries
Increased backlog value 17% to $1.85 billion
Meaningful improvement in operating margin, primarily through a reduction in SG&A ratio
Earnings per share grew 83%
Continued upswing in demand
Increased activity in affordable submarkets, primarily from first-time and first move-up buyers
Growth opportunity, based on our significant expertise in serving these buyers
© 2016 KB Home 18
Expectations for 2017 and Beyond
Work with us to further strengthen our partnerships and all our businesses
Contribute Give Me 2 ideas Brand Value Innovation
Get ready for 2017 and beyond
Engage | Develop | Participate