KB Home (KBH) Fiscal Q3 2026 Earnings Call: BTO Mix Reaches 74%, Q4 Outlook Moderates
Source Tradingkey
Key Takeaways
- KB Home reported fiscal Q3 2026 housing revenue of $1.3 billion, down 20% year over year, as deliveries fell 19% to 2,732 homes.
- Net income declined to $65 million from $110 million, while diluted EPS fell to $1.05 from $1.61. A 9% reduction in diluted average shares partly reflected ongoing repurchases.
- Built-to-order homes reached 74% of deliveries, up from 60% in Q2. This helped adjusted housing gross margin improve sequentially to 16.8% from 15.7%, although it remained below 18.9% a year earlier.
- Management maintained its full-year delivery outlook of 10,500–11,000 homes and narrowed housing revenue guidance to $4.9–$5.1 billion. Full-year housing gross margin is now expected at 16.0%–16.2%, excluding inventory-related charges.
- The Q4 outlook moderated amid weaker demand, pricing pressure, higher costs and a smaller contribution from higher-margin Southern California communities. More than 80% of expected Q4 deliveries were already in backlog.
- KB Home invested nearly $725 million in land acquisition and development while returning more than $65 million through buybacks and dividends. It plans up to $50 million of additional repurchases in Q4.
Key Financial Data
| Metric | Fiscal Q3 2026 | Comparison / Commentary |
|---|---|---|
| Housing revenue | $1.3 billion | Down 20% year over year |
| Homes delivered | 2,732 | Down 19% year over year |
| Average selling price | $473,000 | Slightly below approximately $476,000 a year earlier |
| Backlog conversion | 60% | 71% a year earlier |
| Housing gross margin | 16.5% | 18.2% a year earlier |
| Adjusted housing gross margin | 16.8% | 18.9% a year earlier; up from 15.7% in Q2 |
| Homebuilding operating income | $67 million | $131 million a year earlier |
| Homebuilding operating margin | 5.2% | 8.1% a year earlier |
| SG&A ratio | 11.3% | 10.0% a year earlier |
| Net income | $65 million | $110 million a year earlier |
| Diluted EPS | $1.05 | $1.61 a year earlier |
| Cash | $159 million | Quarter-end |
| Total liquidity | $942 million | Included $783 million available under the unsecured credit facility |
| Debt-to-capital ratio | 35.7% | 33.2% a year earlier |
Business and Operating Performance
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