KB Home (NYSE: KBH) reported Q2 EPS of $0.57, $0.09 better than the analyst estimate of $0.48. Revenue for the quarter came in at $1.1 billion versus the consensus estimate of $1.04 billion.

“In the quarter, we produced double-digit revenue growth, expanded our operating margin and significantly improved our profitability, reflecting solid execution on our core business strategy,” said Jeffrey Mezger, chairman, president and chief executive officer. “Moreover, we measurably increased our absorptions per community by 15%. This result underscores our success in attracting consumers with our personalized Built-to-Order homebuying experience and the targeted positioning of our communities in markets that are continuing to exhibit strong demand.”

“We have made meaningful progress on our Returns-Focused Growth Plan objectives,” continued Mezger. “As part of implementing our Plan over the last 18 months, we have used internally generated cash to invest $2.4 billion in land and development, a 26% increase over the preceding 18 months, to drive growth. At the same time, including our repayment of senior notes earlier this month, we have reduced our outstanding debt by nearly $600 million, which will enhance our future gross margins and returns. We expect to continue to generate considerable cash flow from our operations that can be deployed in a balanced manner to enhance stockholder returns.”

Three Months Ended May 31, 2018 (comparisons on a year-over-year basis)

• Total revenues grew 10% to $1.10 billion.
• Deliveries increased 5% to 2,717 homes.
• Average selling price rose 4% to $401,800.
• Homebuilding operating income improved 50% to $74.2 million.
  • Homebuilding operating income margin increased 180 basis points to 6.8% from 5.0%. Excluding inventory-related charges of $6.5 million in the current quarter and $6.0 million in the year-earlier quarter, homebuilding operating income margin improved 170 basis points to 7.3%.
    • Housing gross profit margin expanded 170 basis points to 17.1%.
      • Housing gross profit margin excluding inventory-related charges increased 170 basis points to 17.7%.
    • Adjusted housing gross profit margin, a metric that excludes inventory-related charges and the amortization of previously capitalized interest, rose 120 basis points to 22.2%.
    • Selling, general and administrative expenses as a percentage of housing revenues were 10.4%, the same as last year’s second quarter record low.
• Total pretax income increased 51% to $78.3 million.
• The Company’s effective tax rate of approximately 27% in the quarter decreased from approximately 39% in the prior-year period, primarily due to the reduction in the federal corporate income tax rate under the Tax Cuts and Jobs Act (“TCJA”).
• Net income rose 80% to $57.3 million, and earnings per share increased 73% to $.57 per diluted share.

For earnings history and earnings-related data on KB Home (KBH) click here.