Mr. Masuda: KB Home has been building homes for nearly a half century and is one of America's premier homebuilders, with operations in 40 of the fastest growing US markets and France. We currently build in Arizona, California, Colorado, Florida, Georgia, Illinois, Indiana, Louisiana, Maryland, Nevada, New Mexico, North Carolina, South Carolina, Texas and Virginia. And our French subsidiary, Kaufman & Broad S.A., is one of the leading homebuilders in France. KB Home is a Fortune 500 company, listed on the New York Stock Exchange. In 2006, we were ranked the number one homebuilder in Fortune magazine's 2006 list of America's Most Admired Companies.
TWST: What are the overall market trends and issues that you are focused
on? What is it that you read as far as headlines and details that you
feel will have an impact on your own strategies and goals at KB Home?
Mr. Masuda: Let me just give you a brief overview of the industry and
what we are seeing in our markets. After several years of exceptional
growth and rapid price escalation in many of the housing markets, we are
starting to see some of those markets pull back from their recent
overheated and in some cases speculative pace. There are signs of
cooling and a shift of investor activity from buying to selling, which
is resulting in less demand and an increased supply in certain markets.
However, once these factors work their way through current housing
supplies, we expect the market to move to a new equilibrium, which we
believe will provide a platform for continuing and sustainable growth at
KB Home. In our view, the tempering of demand to a more sustainable
long-term level is a healthy trend for our company and for the industry,
because the overall market fundamentals that drive housing are still
strong. There is still strong population growth, favorable demographic
trends, low mortgage rates, solid job growth and growth in personal
income. Furthermore, at KB Home, we believe that with our KBnxt
operating model, and the strong purchasing and land acquisition
advantages with being one of the nation's largest builders, we have the
ability to manage through any moderation that we see in the housing
market. However, given that overall demand has moderated, our focus is
to profitably grow our business while delivering sustainable long-term
value for our shareholders. Our focus translates into several
strategies: 1) being more selective on land purchases; 2) focused on
reducing cycle time and improving even-flow production; 3)
opportunistically buying back our stock while maintaining a strong
balance sheet; and 4) maintaining the focus of selling our brand, our
sense of community, our quality and our full array of design studio
options while resisting the use of short-term sales incentives.
Tickers included in this excerpt: KBH
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