Research Update: KB Home Outlook Revised To Stable From Positive On Lower Demand; Ratings Affirmed

We expect U.S.-based homebuilder KB Home's (KBH) year-over-year revenues and EBITDA will decline as housing demand slows due to higher mortgage interest rates, elevated inflation, and other macroeconomic and geopolitical concerns. We expect lower EBITDA amid slowing housing demand to increase debt to EBITDA to the mid 2x area by the end of 2023 from 1.4x at the end of 2022 with debt to capital remaining in the 30% area. Therefore, we revised our outlook to stable from positive and affirmed our 'BB' issuer credit rating. The 'BB' issue-level ratings and '3' recovery rating on the company's unsecured notes are unchanged. The stable outlook reflects our expectations of lower EBITDA than last year, resulting in debt to EBITDA in the

...- We expect U.S.-based homebuilder KB Home's (KBH) year-over-year revenues and EBITDA will decline as housing demand slows due to higher mortgage interest rates, elevated inflation, and other macroeconomic and geopolitical concerns. - We expect lower EBITDA amid slowing housing demand to increase debt to EBITDA to the mid 2x area by the end of 2023 from 1.4x at the end of 2022 with debt to capital remaining in the 30% area. - Therefore, we revised our outlook to stable from positive and affirmed our '##' issuer credit rating. The '##' issue-level ratings and '3' recovery rating on the company's unsecured notes are unchanged. - The stable outlook reflects our expectations of lower EBITDA than last year, resulting in debt to EBITDA in the 2x area and debt to capital in the 30% area....

Research Update