KB Home to Exit Metro Washington, D.C. Market
May 12 2016 - 3:15PM
Business Wire
KB Home (NYSE:KBH), today announced it has begun a transition
out of the Metro Washington D.C. market that is expected to be
completed over the next 12 months. The company plans to continue
constructing and delivering homes in the communities it currently
has in this market, which represents approximately 2% of the
company’s overall community count. The company also has other land
holdings in this market that it primarily intends to build out or
sell. In keeping with its commitment to customer service, the
company will maintain a dedicated team to provide warranty services
and related support to its homebuyers in the Metro Washington D.C.
area.
In connection with the transition, the company expects to record
a largely non-cash, pretax charge in its 2016 second quarter of
between $6 million and $8 million.
“Companywide, one of our objectives is to build large businesses
in our served markets, which provides us with competitive
advantages, from acquiring and developing land, to selling and
building homes. We entered the Metro D.C. region late in the
previous housing cycle, and have not been able to establish the
scale necessary to generate solid returns,” said Jeffrey Mezger,
president and chief executive officer.
“Based on our evaluation of opportunities to drive long-term
stockholder value, we are reallocating our resources to more
productively deploy our assets to markets where we have a larger,
established presence and believe we can generate stronger returns,”
concluded Mezger.
For more information about KB Home, visit www.kbhome.com or call
888-KB-HOMES.
About KB Home
KB Home is one of the largest and most recognized homebuilders
in the United States and an industry leader in sustainability,
building innovative and highly energy- and water-efficient new
homes. Founded in 1957 and the first NYSE-listed homebuilder
(ticker symbol: KBH), the company has built nearly 600,000 homes
for families from coast to coast. Distinguished by its personalized
homebuilding approach, KB Home lets each buyer choose their lot
location, floor plan, décor choices, design features and other
special touches that matter most to them. To learn more about KB
Home, call 888-KB-HOMES, visit www.kbhome.com or connect on
Facebook.com/KBHome or Twitter.com/KBHome.
Forward-Looking and Cautionary Statements
Certain matters discussed in this press
release, including any statements that are predictive in nature or
concern future market and economic conditions, business and
prospects, our future financial and operational performance, or our
future actions and their expected results are “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements are based on current
expectations and projections about future events and are not
guarantees of future performance. We do not have a specific policy
or intent of updating or revising forward-looking statements.
Actual events and results may differ materially from those
expressed or forecasted in forward-looking statements due to a
number of factors. The most important risk factors that could cause
our actual performance and future events and actions to differ
materially from such forward-looking statements include, but are
not limited to the following: general economic, employment and
business conditions; population growth, household formations and
demographic trends; adverse market conditions, including an
increased supply of unsold homes, declining home prices and greater
foreclosure and short sale activity, among other things, that could
negatively affect our consolidated financial statements, including
due to additional impairment or land option contract abandonment
charges, lower revenues and operating and other losses; conditions
in the capital, credit and financial markets (including residential
mortgage lending standards, the availability of residential
mortgage financing and mortgage foreclosure rates); material prices
and availability; trade costs and availability; changes in interest
rates; inflation; our debt level, including our ratio of debt to
capital, and our ability to adjust our debt level, maturity
schedule and structure and to access the equity, credit, capital or
other financial markets or other external financing sources,
including raising capital through the public or private issuance of
common stock, debt or other securities, and/or project financing,
on favorable terms; our compliance with the terms and covenants of
our revolving credit facility; volatility in the market price of
our common stock; weak or declining consumer confidence, either
generally or specifically with respect to purchasing homes;
competition for home sales from other sellers of new and resale
homes, including lenders and other sellers of homes obtained
through foreclosures or short sales; weather events, significant
natural disasters and other climate and environmental factors,
including the severe prolonged drought and related
water-constrained conditions in the southwest United States and
California; government actions, policies, programs and regulations
directed at or affecting the housing market (including the
Dodd-Frank Act, tax credits, tax incentives and/or subsidies for
home purchases, tax deductions for residential mortgage interest
payments and property taxes, tax exemptions for profits on home
sales, programs intended to modify existing mortgage loans and to
prevent mortgage foreclosures and the standards, fees and size
limits applicable to the purchase or insuring of mortgage loans by
government-sponsored enterprises and government agencies), the
homebuilding industry, or construction activities; decisions
regarding federal fiscal and monetary policies, including those
relating to taxation, government spending, interest rates and
economic stimulus measures; the availability and cost of land in
desirable areas; our warranty claims experience with respect to
homes previously delivered and actual warranty costs incurred,
including our warranty claims and costs experience at certain of
our communities in Florida; costs and/or charges arising from
regulatory compliance requirements or from legal, arbitral or
regulatory proceedings, investigations, claims or settlements,
including unfavorable outcomes in any such matters resulting in
actual or potential monetary damage awards, penalties, fines or
other direct or indirect payments, or injunctions, consent decrees
or other voluntary or involuntary restrictions or adjustments to
our business operations or practices that are beyond our current
expectations and/or accruals; our ability to use/realize the net
deferred tax assets we have generated; our ability to successfully
implement our current and planned strategies and initiatives with
respect to product, geographic and market positioning (including
our efforts to expand our inventory base/pipeline with desirable
land positions or interests at reasonable cost and to expand our
community count, open additional communities for sales, sell
higher-priced homes and more design studio options, increase the
size and value of our backlog, and our operational and investment
concentration in markets in California), revenue growth, asset
optimization (including by effectively balancing home sales prices
and sales pace in our communities), asset activation and/or
monetization, local field management and talent investment,
containing and leveraging overhead costs, gaining share and scale
in our served markets and increasing our housing gross profit
margins and profitability; consumer traffic to our new home
communities and consumer interest in our product designs and
offerings, particularly from higher-income consumers; cancellations
and our ability to realize our backlog by converting net orders to
home deliveries and revenues; our home sales and delivery
performance, particularly in key markets in California; our ability
to generate cash from our operations, enhance our asset efficiency,
increase our operating income margin and/or improve our return on
invested capital; the manner in which our homebuyers are offered
and whether they are able to obtain residential mortgage loans and
mortgage banking services, including from Home Community Mortgage;
the performance of Home Community Mortgage; information technology
failures and data security breaches; and other events outside of
our control. Please see our periodic reports and other filings with
the Securities and Exchange Commission for a further discussion of
these and other risks and uncertainties applicable to our
business.
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version on businesswire.com: http://www.businesswire.com/news/home/20160512006523/en/
KB HomeJill Peters,
Investors310-893-7456jpeters@kbhome.comorSusan Martin,
Media310-231-4142smartin@kbhome.com
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