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- **Strong Financials**: Q3 revenue $1.62B, EPS $1.61, with 18.9% adjusted gross margin. YTD capital returned: $490M.
- **Operational Excellence**: Build times down to 130 days, direct costs 3% lower Y/Y. 32 new communities opened.
- **BTO Strategy**: Aiming for 70% BTO mix, with 250-500bps margin premium. Q4 focus on disciplined pricing.
- **Market Outlook**: Long-term favorable, but cautious on Q4 with $1.6-1.7B housing revenue guidance.
- **Share Buybacks**: $440M YTD, targeting $50-150M Q4, highest repurchase rate vs. peers.

**【CEO Summary Section】**
- **Revenue and Profit Growth**: Q3 2025 revenue of $1.62 billion, with diluted EPS of $1.61, exceeding guidance. Gross margin (adjusted) was 18.9%, above high end of guidance.
- **Share Buybacks**: Repurchased $188 million in Q3, $440 million YTD, representing 11% of shares outstanding. Total capital returned YTD: $490 million.
- **Operational Efficiency**: Build times reduced by 10 days Q/Q to 130 days, with 122 days for built-to-order homes. Direct costs down 3% Y/Y.
- **Built-to-Order Strategy**: Aiming for 70% BTO mix (currently 50%), with BTO homes generating 250-500bps higher margin than inventory homes.
- **Market Outlook**: Long-term favorable due to demographics and undersupply, but cautious on Q4 with focus on disciplined pricing.

**【CFO Financial Commentary】**
- **Financial Highlights**: Housing revenues $1.61 billion (8% Y/Y decline), 3,393 homes delivered. Adjusted gross margin 18.9%, SG&A 10% of housing revenues.
- **Balance Sheet**: $1.2 billion liquidity, $5.8 billion in land and inventory. Total debt-to-capital ratio 33.2%, targeting 30%.
- **Q4 Guidance**: Housing revenues $1.6-1.7 billion, gross margin 18-18.4%, SG&A 9.3-9.7%.
- **Capital Allocation**: $50-150 million share buybacks Q4, prioritizing returns over land investment.

**【Q&A Key Highlights】**
- **Order ASP Trends**: Sequential decline due to regional mix (e.g., lower ASP in Southeast), but 70% communities saw stable or rising prices.
- **Mortgage Rates Impact**: $30k purchasing power boost from 60bps rate decline, steady traffic but cautious buyer sentiment.
- **Gross Margin Expectations**: Full-year margin 19.2-19.3%, driven by cost reductions and BTO mix shift.
- **Community Performance**: 32 new communities opened Q3, 264 active communities (4% Y/Y growth). BTO homes in backlog: 52%.
- **Land Strategy**: Cancelled 6,800 lots to focus on better economics, land spend $514 million Q3 (7% Y/Y lower).

KB Home (KBH) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

KBH

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