2009 Credit Suisse Homebuilder Conference. Jeffrey Mezger, President and Chief Executive Officer January 14, 2009

Transcription

1 2009 Credit Suisse Homebuilder Conference Jeffrey Mezger, President and Chief Executive Officer January 14, 2009

2 Cautionary Statements Certain matters discussed in this presentation, including any statements concerning our future financial performance, business and prospects, and our future actions and their expected results, are forwardlooking statements as defined in the Private Securities Litigation Reform Act of 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: general economic and business conditions; adverse market conditions that could result in additional asset impairments or abandonment charges and operating losses, including an oversupply of unsold homes and declining home prices, among other things; material prices and availability; labor costs and availability; changes in interest rates; our debt level; declines in consumer confidence; increases in competition; weather conditions, significant natural disasters and other environmental factors; government actions and regulations directed at or affecting the housing market, the homebuilding industry, or construction activities; the availability and cost of land in desirable areas; government investigations and shareholder lawsuits regarding our past stock option grant practices and the restatement of certain of our financial statements; other legal or regulatory proceedings or claims; conditions in the capital, credit (including consumer mortgage lending standards, the availability of consumer mortgage financing and mortgage foreclosure rates) and homebuilding markets; the ability and/or willingness of participants in our unconsolidated joint ventures to fulfill their obligations; our ability to access our available capacity under our unsecured revolving credit facility; our ability to use the net deferred tax assets we have generated; 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. 2

3 KB Home At a Glance Founded in 1957 Listed on the NYSE under the ticker symbol KBH Fortune 500 company $3 billion in 2008 revenues 12,438 homes delivered in 2008 Geographically diverse in 30 major markets Ample liquidity with more than $1.8 billion in available capital 45% net debt to total capital at November 30, 2008 Experienced senior management team 3

4 National Market Conditions Oversupply of Inventory More than 11 months supply Increase in foreclosures 20% to 60% drop in YOY permits Downward Pressure on Pricing Increased incentives Growth in foreclosures Significant drop in ASP Mortgage Market Tightening Elimination of loan products More stringent underwriting standards Consumer Confidence Down No urgency to purchase Wait and see attitude Economics/Development Environment Unemployment highest in 5 years Positive public policy 4

5 Strategy in the Downturn In early 2006 we recognized that the housing market was changing, and we were among the first builders to begin shifting focus from growth to inventory reduction and cash generation. Key areas of focus include: Generating and preserving cash Maintaining a strong, liquid balance sheet Lowering our cost to build Gaining operational efficiencies and lowering overhead Developing innovative new home designs to compete with resales and foreclosures Restoring consistent profitability 5

6 2008 Financial Summary ($ in millions, except average sales price) Fiscal Year Ended Quarter Ended Homes Delivered Average Sales Price Revenue Housing Gross Margin* Operating Income* 11/30/08 12,438 $236,400 $3, % ($186) 11/30/07 23,743 $261,600 $6, % $4 11/30/08 3,912 $232,200 $ % $8 11/30/08 8,132 $247,800 $2, % ($26) Balance Sheet Cash 11/30/08 $1,251 11/30/07 $1,325 % (6%) Inventory $2,107 $3,312 (36%) Debt (Net of Cash) $691 $837 (17%) Lots Owned and Controlled 47,000 65,700 (28%) *Excluding non-cash impairments and abandonment charges 6

7 Debt Profile $500 Fixed-rate debt ($ in millions) $ /4% SR $400 $300 $200 $ /8 % SR Sub $ /8% SR $ /4% SR $ /8% SR $ /4% SR $100 0 $ Well Laddered Maturities 7

8 Aggressive Actions Drove Results In the fourth quarter, we continued to aggressively resize and reposition our business without compromising our strategic growth platform. Peak Current Markets Divisions Inventory $7,232 $2,107 Lots Owned & Controlled 186,300 47,000 Community Count Average Sales Price $295,300 $236,400 Net Debt $3,543 $691 Employees ~6,300 ~1,600 as of ($ in millions, except per unit information) 8

9 One Size Does Not Fit All Value Engineering existing designs to reduce unnecessary costs Rancho Vista 2/06-12/07 3,633 sq ft, 2-story 4 Bedrooms Reducing square footage and spec levels to compete with resales and foreclosures California Vista 4/07-7/08 1,920 sq ft, 2-story 4 Bedrooms 9

10 Introducing The Open Series A new generation of home designs Phoenix, AZ Charlotte, NC 10

11 KB Home in 2009 and Beyond More efficient, land light company Focusing on key long-term growth markets Strong focus on generating cash Repositioning business to restore profitability Continually transforming product line to be competitive with resales and foreclosures Driving down our cost to build to keep pace with declining home prices Continually refining our operations and scaling our business appropriately 11

12 2009 Credit Suisse Homebuilder Conference Jeffrey Mezger, President and Chief Executive Officer January 14, 2009