KB Home to Repay Senior Notes

KB Home (NYSE: KBH) today announced that it plans to repay the entire
$300 million in aggregate principal amount of its 7.25% Senior Notes due
2018 at their maturity on June 15, 2018 using internally generated cash.

“The successful execution of our Returns-Focused Growth Plan is evident
in the substantial operating cash flow we have generated, which has
enabled us to make significant investments in land and development as
well as meaningfully reduce our debt balance over the past two years,”
said Jeffrey Mezger, chairman, president and chief executive officer.
“With our planned retirement of the $300 million of senior notes due in
June and our repayment of the $265 million in senior notes that matured
in 2017, both using internally generated cash, we will have exceeded our
2019 debt reduction target of $250 million by more than two-fold. In
addition, these debt repayments will reduce our annual incurred interest
by approximately $46 million, considerably enhancing our future gross
margins and returns. We remain confident in our ability to make further
progress on our Returns-Focused Growth Plan targets, and to continue to
generate long-term stockholder value.”

 

Forward-Looking and Cautionary Statements

Certain matters discussed in this press release may be “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements are based on current (at
the time made) expectations and projections about future events and are
subject to risks, uncertainties, and assumptions about our operations,
economic and market factors, and the homebuilding industry, among other
things. These statements 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; conditions in the capital, credit and financial markets; our
ability to access external financing sources and raise capital through
the issuance of common stock, debt or other securities, and/or project
financing, on favorable terms; material and trade costs and
availability; changes in interest rates; our debt level, including our
ratio of debt to capital, and our ability to lower and/or otherwise
adjust our debt level and maturity schedule; our compliance with the
terms 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
from other sellers of new and resale homes; weather events, significant
natural disasters and other climate and environmental factors;
government actions, policies, programs and regulations directed at or
affecting the housing market (including the Tax Cuts and Jobs Act
(TCJA), the Dodd-Frank Act, tax benefits associated with purchasing and
owning a home, 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; changes in existing tax laws or enacted
corporate income tax rates, including those resulting from regulatory
guidance and interpretations issued with respect to the TCJA; the
availability and cost of land in desirable areas; our warranty claims
experience with respect to homes previously delivered and actual
warranty costs incurred; 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 related to our product, geographic and market
positioning, gaining share and scale in our served markets; our
operational and investment concentration in markets in California;
consumer interest in our new home communities and products, particularly
from first-time homebuyers and higher-income consumers; our ability to
generate orders and convert our backlog of orders to home deliveries and
revenues, particularly in key markets in California; our ability to
successfully implement our Returns-Focused Growth Plan and achieve the
associated revenue, margin, profitability, cash flow, community
reactivation, land sales, business growth, asset efficiency, return on
invested capital, return on equity, net debt to capital ratio and other
financial and operational targets and objectives; income tax expense
volatility associated with stock-based compensation; the ability of our
homebuyers to obtain residential mortgage loans and mortgage banking
services; the performance of mortgage lenders to our homebuyers; the
performance of KBHS Home Loans, LLC, our mortgage banking joint venture
with Stearns Lending, LLC; 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.

This article provided by NewsEdge.