Research Update: KB Home Outlook Revised To Positive From Stable On Falling Debt Ratio; 'BB' Rating Affirmed

Los Angeles-based homebuilder KB Home (KBH) is set to boost EBITDA more than 40% again in 2022 on strong demand throughout its markets. With debt mostly unchanged, we now expect debt to EBITDA to trend further below 2x. We revised our outlook to positive from stable. We also affirmed our 'BB' issuer credit and issue-level ratings. The recovery rating on KBH's debt remains '3'. The positive outlook reflects the likelihood that debt to EBITDA finishes 2022 at about 1.5x, even as KBH pays for sizable land and development increases largely through funds from operations (FFO), which we expect to approach $1 billion. The positive outlook reflects revenue improvements in 2021 that we expect to generate close to $1.2 billion in

...January 20, 2022 - Los Angeles-based homebuilder KB Home (KBH) is set to boost EBITDA more than 40% again in 2022 on strong demand throughout its markets. - With debt mostly unchanged, we now expect debt to EBITDA to trend further below 2x. - We revised our outlook to positive from stable. - We also affirmed our '##' issuer credit and issue-level ratings. The recovery rating on KBH's debt remains '3'. - The positive outlook reflects the likelihood that debt to EBITDA finishes 2022 at about 1.5x, even as KBH pays for sizable land and development increases largely through funds from operations (FFO), which we expect to approach $1 billion....

Research Update