KB Home (KBH) Financials

KB Home’s latest financial statements show a business that remains profitable but is operating with substantially lower revenue, margins and cash generation than it did in 2023 and 2024. In Q2 2026, revenue increased sequentially to $1.11 billion from $1.08 billion in Q1 2026, but remained well below the $1.53 billion reported in Q2 2025 and $1.71 billion in Q2 2024. Net income declined to $27.3 million, or $0.43 per diluted share, compared with $107.9 million, or $1.50 per diluted share, in Q2 2025.

Profitability has deteriorated sharply. Q2 2026 gross margin was approximately 15.6%, compared with 19.6% in Q2 2025 and more than 21% in Q2 2023 and Q2 2024. Operating margin fell to roughly 2.9% from 8.8% a year earlier. Selling, general and administrative expense also increased to $142.0 million from $132.6 million in Q1 2026, consuming a larger portion of gross profit.

Cash flow improved sequentially but remains weaker than historical levels. Operating cash flow was positive at $31.9 million in Q2 2026, reversing the $125.4 million outflow in Q1. However, this was substantially below the $168.4 million generated in Q2 2025 and the $514.8 million generated in Q2 2023. The latest quarter also included a $18.4 million use of cash from operating assets and liabilities, suggesting that working-capital needs continue to pressure cash conversion.

The balance sheet remains solvent, although liquidity has tightened. Cash and equivalents declined to $200.8 million at May 31, 2026, from $310.9 million one year earlier and $644.3 million in Q2 2024. Net inventory increased sequentially to $5.73 billion, representing approximately 85% of total assets. Long-term debt rose to $1.97 billion from $1.89 billion a year earlier, while total liabilities increased to $2.98 billion. Even so, shareholders’ equity remained substantial at $3.80 billion, and current assets exceeded current liabilities by approximately $5.32 billion, although that cushion is heavily dependent on inventory.

• KB Home remains profitable. Q2 2026 net income was $27.3 million, and operating cash flow remained positive at $31.9 million despite challenging conditions.
• Sequential revenue and operating cash flow improved. Revenue rose from $1.08 billion in Q1 2026, while operating cash flow swung from a $125.4 million outflow to a $31.9 million inflow.
• Share count reduction continues to support per-share results. Basic weighted-average shares fell to 61.8 million in Q2 2026 from 70.0 million in Q2 2025 and 75.7 million in Q2 2024.
• Shareholder returns remain a priority. KB Home repurchased $80.1 million of common stock and paid $15.3 million in dividends during Q2 2026. The quarterly dividend remained $0.25 per share, above the $0.15 paid in 2023.
• Equity continues to provide a meaningful capital cushion. Total common equity was $3.80 billion at the end of Q2 2026, exceeding total liabilities of $2.98 billion.
• Cash flow is highly seasonal and working-capital sensitive. Operating cash flow has ranged from large outflows to substantial inflows across recent quarters, making individual-quarter comparisons difficult.
• Debt financing remains an important source of liquidity. KB Home issued $175.0 million of debt in Q2 2026 while repaying $100.1 million, resulting in a net financing cash outflow after buybacks and dividends.
• Inventory has declined from the 2024 peak but remains elevated. Net inventory was $5.73 billion versus $5.91 billion in Q2 2025 and $5.34 billion in Q2 2024, leaving results sensitive to home demand and pricing.
• Revenue and earnings remain in a multiyear downtrend. Q2 revenue declined approximately 37% from Q2 2023, while net income fell approximately 83% over the same period.
• Margin compression is the most significant concern. Gross margin fell to approximately 15.6% in Q2 2026 from 21.5% in Q2 2024, while operating margin declined from approximately 11.4% to 2.9%.

For investors, the key question is whether KB Home can stabilize pricing and margins while converting its large inventory position into cash. The company’s equity base, continued profitability and reduced share count are supportive, but declining cash, higher debt and sharply lower operating margins indicate that the financial recovery remains incomplete.