DJ Kaufman & Broad SA: 1st quarter 2022 résults
Kaufman & Broad SA Kaufman & Broad SA: 1st quarter 2022 résults 14-Apr-2022 / 18:35 CET/CEST Dissemination of a French Regulatory News, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.
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Press release
In Paris, on April 14, 2022
1st QUARTER 2022 RESULTS
-- Results in line with expectations
-- Very solid financial structure
-- EUR1.95 dividend per share to be proposed at the coming General Meetingon May 5, 2022
-- Key sales
activity indicators
(Q1 2022 vs. Q1 2021)
- Total orders: Today, Kaufman & Broad SA reported its unaudited results for the first quarter of the
2022 fiscal year (December 1, 2021 to February 28, 2022). Nordine Hachemi, Chairman and
Chief Executive Officer of Kaufman & Broad, made the following comments:
EUR278.0 M vs. EUR272.7 M incl.
VAT
Of which Housing: EUR278.0 M "The 1st quarter results are in line with our expectations. Orders increased by 8.1% in
vs. EUR238.3 M incl. VAT volume, and by 18.6% in value. The pace of sales remained strong. As we had mentioned
last January, the volume of construction permits granted grew, quarter-over-quarter, but
1,237 vs. 1,144 units did not reach the same level as in previous years.
- Housing take-up
period*:
Pressure on the cost of construction, linked to the health crisis, was anticipated and
4.5 vs. 4.9 months (0.4 has been absorbed by the cautious provisioning policy we have implemented for the past
months) several years, along with strict positions on real estate acquisitions.
-- Key financial This has allowed us to maintain an acceptable economic performance over the quarter,
data with a virtually stable gross margin, EBIT margin, and net result. The increased WCR
compared to end-February 2021 is as expected. It reflects an accelerated start-up of
(Q1 2022 vs. Q1 2021 except operations that will help contribute to revenue over the year.
where otherwise stated)
With the evolving global economic and geopolitical situation, we anticipate increased
- Revenue: pressure on the cost of construction over the coming period, and, going forward, on
EUR279.0 M vs. EUR285.9 M interest rates.
Of which Housing: EUR235.2 M vs.
EUR247.3 M While Kaufman & Broad is not yet seeing any particular pressure on its key sales
Gross margin: indicators (orders, acquisition of new prospects, cancellation rate, and take-up
periods), the group is already mobilized to deal with a possible deterioration of the
EUR48.3 M vs. EUR49.4 M economic situation during the coming months.
- EBIT margin**:
7.5% vs. 7.7%
- EBIT: EUR21.0 M Kaufman & Broad is even more selective in the positions it takes on real estate
vs. EUR21.9 M acquisitions, the costs of which are already systematically evaluated to take account of
- Attributable net increasing construction costs and our customers purchasing power.
income:
EUR11.8 M vs. EUR11.8 M
- Net financial In addition, we have implemented a rigorous optimization program for all of our
debt***: projects, whether for their technical and financial structuring or their sales
conditions.
EUR69.5 M vs. -EUR35.9 M at
end-Nov. 2021
- Financing In the medium term, by relying on the quality of our Backlog and the robustness of our
capacity: EUR336.5 M vs. financial structure, we at Kaufman & Broad are confident in our ability to take
-EUR439.5 M at end-Nov. 2021 advantage of the still-strong consumer and investor demand. Housing needs has never been
so high, powered by demographic, sociological and environmental factors.
-- Key growth To date, the outlook we announced last January for all of 2022 remains unchanged:
indicators revenue is projected to increase by at least 5%. The EBIT margin should be above 7%.
(end-Feb. 2022 vs. end-Feb.
2021)
Kaufman & Broad will continue to closely monitor the evolution of the economic and
financial situation, particularly in terms of interest rates"
- Total backlog:
EUR3,374.1 M vs.EUR3,572.4 M
Of which Housing: EUR2,278.7 M
vs. EUR2,332.6 M
- Housing property
portfolio:
34,199 units vs 35,149 units
at end-Nov. 2021
-- Sales activity
-- Housing
Q1 2022 saw EUR278.0 million (including VAT) in housing orders in value, compared to EUR234.3 for Q1 2021, an 18.6% increase. In volume, this amounted to 1,237 units (vs. 1,144 in Q1 2021), an 8.1% increase.
The take-up period for construction programs was 4.5 months over 3 months, a 1.9-month improvement over Q1 2021 (4.9 months).
Supply, with 94% of housing units located in high-demand, low-supply areas (A, Aa and B1), stood at 1,873 units at end-February 2022 (vs. 1,872 at end-February 2021).
Breakdown of the customer base
First-time buyer orders accounted for 18% of sales in value (including VAT), compared to 9% for Q1 2021. Second-time buyers accounted for 12% of sales, vs. 6% during the same period in 2021.
Orders from investors accounted for 36% of sales (of which 30% for the Pinel incentive alone). And finally, block sales were down significantly, at 34% of orders in terms of value (incl. VAT) vs. 51% for Q1 2021.
-- Commercial Property
No orders were recorded for Commercial properties in Q1 2022, compared to EUR38.4 million in net orders during Q1 2021.
Kaufman & Broad is currently marketing or reviewing approximately 130,000 sq.m of office and 214,000 sq.m of logistics space. It also currently has over 93,400 sq.m of office space either currently under construction or starting up over the next few months, along with over 42,100 sq.m of logistics space. And finally, it still has nearly 101,000 sq.m of office space transactions to be finalized.
-- Leading sales and growth indicators
As of February 28, 2022, the Housing backlog stood at EUR2,278.7 million (excl. VAT), vs. EUR2,332.6 million (excl. VAT), covering 24.9 and 29.8 months of business respectively. Kaufman & Broad also had 145 housing programs in the marketing phase as of the same date, representing 1,873 housing units (vs. 146 programs and 2,011 units at end- 2021).
The Housing property portfolio represents 34,199 units. It is down 5.5% compared to end-February 2021, and corresponds to over 5 years of commercial business.
Land reserves make up 94% of the housing units located in high-demand, low-supply areas, i.e. 32,198 units as of end-February 2022.
In Q2 2022, the group plans to start up 35 new programs, including 17 in Ile-de-France with 694 units, and 18 in the Provinces, with 797 units.
At end-February, the Commercial properties Backlog had recorded no sales, compared to EUR1,239.8 million excl. VAT at end-February 2021.
-- Financial results
-- Activity
Overall revenue stands at EUR279.0 million, compared to EUR285.9 million in Q1 2021.
Housing revenue was EUR235.2 million (excl. VAT), vs. EUR247.3 million (excl. VAT) in H1 2021. This represents 84.3% of group revenue.
Revenue from the Apartment business stands at EUR229.3 million (excl. VAT),(vs. EUR227.9 million (excl. VAT) in Q1 2021).
Revenue in the Commercial Property segment came to EUR41.3 million (excl. VAT), compared to EUR36.3 million for the same period in 2021.
Other business generated revenue of EUR2.5 million (excl. VAT), vs. EUR2.3 million in 2021.
-- Profitability data
Gross margin was EUR48.3 million for Q1 2022, compared to EUR49.4 million for the same period in 2021. The gross margin ratio was the same as for 2021, standing at 17.3%.
Current operating expenses totaled EUR27.3 million (9.8% of revenue), vs. EUR27.5 million in Q1 2021 (9.6% of revenue).
Current operating income stood at EUR21.0 million, compared to EUR21.9 million in 2021. The current operating income margin was 7.5% vs. 7.7% for Q1 2021.
Consolidated net income for Q1 2022 totaled EUR15.7 million vs. EUR14.8 million for 2021. Non-controlling equity interests stood at EUR3.9 million vs. EUR3.0 million for Q1 2021.
At EUR11.8 million, attributable net income was the same as for Q1 2021.
-- Financial structure and liquidity
The financial net debt as at February 28, 2022 (not including IFRS 16 lease liabilities and Neoresid put debt) was EUR69.5 million, to be weighed against EUR35.9 million in positive net cash at end-November 2021. Cash assets (available cash and investment securities) stood at EUR86.5 million on February 28, 2022, compared to EUR189.5 million as at November 30, 2021. Financial capacity was EUR336.5 million compared to EUR439.5 million at end-November 2021.
Working capital requirements stood at EUR229.4 million at end-February 2022, i.e. 18.0% of revenue, compared to EUR169.3 million as at Febuary 28, 2021 (14.7% of revenue).
-- Dividends
Kaufman & Broad Sa's Board of Directors plans to propose a dividend payment of EUR1.95 per share at the Shareholders' Meeting to be held on May 5, 2022.
-- 2022 outlook
To date, the outlook we announced last January for all of 2022 is bearing out: revenue is projected to increase by at least 5%. The EBIT margin should be above 7%.
Kaufman & Broad will continue to closely monitor the evolution of the economic and financial situation, particularly in terms of interest rates.
This press release is available at www.kaufmanbroad.fr
-- Next periodic disclosure date:
-- May 5, 2022: General Meeting of shareholders
-- July 12, 2022: H1 2022 Results (after market close)
Contacts
Chief Financial Officer Press Relations
Bruno Coche
Kaufman & Broad: Emmeline Cacitti
01 41 43 44 73
06 72 42 66 24/ecacitti@ketb.com
Infos-invest@ketb.com
About Kaufman & Broad - Kaufman & Broad has been designing, developing, building, and selling single-family homes in communities, apartments, and offices on behalf of third parties for more than 50 years. Its size, profitability and strong brand name have made Kaufman & Broad one of France's leading property developers and builders.
Kaufman & Broad's Universal Registration Document was filed with the Autorité des Marchés Financiers (French Financial Markets Authority, the "AMF") on March 31, 2022 under number D.22-0223. It is available on the websites of the AMF (www.amf-france.org) and Kaufman & Broad (www.kaufmanbroad.fr). It contains a detailed description of Kaufman & Broad's operations, results and outlook, as well as the related risk factors. Kaufman & Broad notes in particular the risk factors described in Chapter 4 of the Universal Registration Document. Should one or more of these risks occur, the operations, assets, financial position, results or outlook of the Kaufman & Broad group, as well as the market price of Kaufman & Broad shares, could be materially adversely affected.
This press release does not, and shall not, constitute a public offer, nor an offer to sell or to subscribe, nor a solicitation to offer to purchase or to subscribe securities in any jurisdiction.
GLOSSARY
Backlog (order book): in the case of sales before completion (VEFA), the backlog covers orders for housing units that have not been delivered and for which a notarized deed of sale has not yet been signed, and orders for housing units that have not been delivered and for which a notarized deed of sale has been signed for the portion not yet recorded in revenue (in the case of a program that is 30% complete, 30% of the revenue from a housing unit for which a notarized deed has been signed is recognized as revenue, while 70% is included in the backlog). The backlog is a summary established at a given time, making it possible to estimate the amount of revenue yet to be recognized over the coming months and thus upholding the group's forecasts - with the proviso that there is an element of uncertainty in the conversion of the backlog into revenue, particularly for orders for which a deed of sale has not yet been signed.
Lease-before-completion (BEFA): a lease-before-completion involves a customer leasing a building before it is built or redeveloped.
Working Capital Requirement (WCR): WCR results from deferrals of cash flow: inflows and outflows relating to operating expenditures and revenues necessary for the design, production and marketing of real estate projects. WCR can thus be simply expressed as current assets (inventory + accounts receivable + other operating receivables + advances received + deferred income) minus current liabilities (accounts payable + VAT and social security liabilities + other operating liabilities + prepaid expenses). The amount of WCR will depend in particular on the length of the operating cycle, the extent and duration of the work-in-process inventory carried, the number of projects initiated, and the payment terms granted by suppliers and delivery schedules granted to customers.
Free cash flow: free cash flow is equal to cash flow minus net operating investments
for the financial period.
Cash flow: cash flow after cost of financial debt and taxes is equal to consolidated net income adjusted for the group's share of the income of equity affiliates and joint ventures, the income from discontinued operations, and estimated income and expenses.
Financing capacity: corresponds to cash assets plus lines of credit not yet drawn.
Senior loans (lines of credit): banks use senior debt to fund LBO (leveraged buyout) transactions. LBO financing by banks is risky in the bank credit market. It consists of loans repayable by installments and/or, most frequently, "bullet repayment" type loans, but also lines of credit to finance the working capital requirements and growth policies of companies involved in this type of acquisition. Senior debt is debt that enjoys specific guarantees, the repayment of which has priority over other so-called subordinated debt. It is therefore "priority debt".
Take-up period: the inventory take-up period is the number of months required for available housing units to be sold if sales continue at the same pace as in previous months, i.e. housing units outstanding (available supply) per quarter divided by the number of orders per quarter ended and with orders in turn divided by three.
Dividend: the dividend is the share of a company's annual net profit distributed to shareholders. Its amount is proposed by the Board of Directors and is subject to approval at the Shareholders' Meeting. It is payable within a maximum period of nine months after the end of the fiscal year.
EBIT: corresponds to current operating income, i.e. gross margin minus current operating expenses.
Gross debt or gross financial debt: gross financial debt consists of long-term and short-term financial liabilities, financial hedging instruments relating to those liabilities, and accrued interest on those liabilities and hedging instruments.
Net debt or net financial debt: a company's net debt or net financial debt is the balance between its gross financial liabilities (or gross financial debt) on the one hand, and the available cash and financial investments constituting its "cash assets" on the other. It represents the company's creditor or debtor position with respect to third parties outside the operating cycle.
EHU: EHUs (Equivalent Housing Units) are a direct reflection of business volumes. The number of EHUs is a function of multiplying (i) the number of housing units of a given program for which notarized sales deeds have been signed by (ii) the ratio between the group's property expenses and construction expenses incurred on said program and the total expense budget for said program.
Gross margin: corresponds to revenue minus the cost of sales. The cost of sales is made up of the price of land and any related costs plus the cost of construction.
Property supply: refers to the total inventory of properties available for sale as of the date in question, i.e. all unordered housing units as of this date (minus the programs that have not yet entered the marketing phase).
Property portfolio: includes land for development (otherwise called the land portfolio), i.e. land for which a deed or promise of sale has been signed, as well as land under review, i.e. land for which a deed or promise of sale has not yet been signed.
Debt (or gearing) ratio: the ratio of net debt (or net financial debt) to the company's consolidated shareholders' equity. It measures the risk to the company's financial structure.
Orders: measured in volume terms (units) and value terms; orders reflect the group's sales activity. Orders are recognized in revenue based on the time necessary to "convert" an order into a signed and notarized deed, which is the point at which income is generated. In addition, in the case of multi-occupancy housing programs that include mixed-use buildings (apartments, business premises, retail space, and offices), all of the floor space is converted into housing unit equivalents.
Orders (in value): this figure represents the value of the real estate as expressed in order contracts signed, including VAT, for a given period. It is net of cancellations recorded during that period.
Managed housing: managed housing, or service housing, refers to building complexes made up of units
(houses or apartments) for residential use, offering certain services such as reception, linens, housekeeping and maintenance, and breakfast. There are several different types of housing in this category: student housing including apartment complexes, mostly furnished studios with a kitchenette located in the vicinity of schools and universities and close to public transportation; tourist accommodation located in high-potential tourist areas offering, in addition to the usual services, amenities such as swimming pools, sports fields, sometimes saunas, steam rooms, jacuzzis and children's clubs; corporate housing as an alternative to traditional hotels, including studios (about 80%) and two-room apartments located in city centers or close to major business hubs with convenient access to everything; and lastly, senior residences (including both assisted and non-assisted living facilities for the elderly) designed to prepare for an aging population and housing people aged 55 and over; their customers include both leaseholders and property owners.
CSR (Corporate Social Responsibility): Corporate Social Responsibility (CSR) is the contribution made by businesses to sustainable development issues. For businesses, this consists in taking into account the social and environmental impacts of their activities and adopting the best possible practices, thus helping to improve society and protect the environment. CSR makes it possible to combine economic thinking, social responsibility and environmental responsibility (as defined by the French Ministry of Ecology, Sustainable Development and Energy).
Take-up rate: this represents the percentage of a real estate program's initial inventory that is sold on a monthly basis (sales per month divided by the initial inventory), i.e. net monthly orders divided by the ratio between the opening inventory and the closing inventory, divided by two.
EBIT margin: expressed as a percentage, this corresponds to current operating income, i.e. gross margin minus current operating expenses divided by revenue.
Cash assets: correspond to cash and cash equivalents on the assets side of the balance sheet, i.e. all available cash (bank balances and cash on hand), investment securities (short-term investments and term deposits), and order balances.
Net cash: corresponds to "negative" net debt or "negative" net financial debt, meaning that the company's balance of available cash and financial investments making up its "cash assets" is greater than the amount of its gross liabilities (or gross financial debt).
Units: the number of housing units or equivalent housing units (for mixed projects) in a given project. The number of equivalent housing units is calculated as a ratio between the surface area by type (business premises, retail space or offices) and the average surface area of the housing units previously obtained.
Sale-before-completion (VEFA): a sale-before-completion is an agreement whereby the seller immediately transfers its rights to the land and ownership of the existing buildings to the buyer. The future structures will become the buyer's property as and when they are completed: the buyer is required to pay the price of these structures as construction on them progresses. The seller retains the powers of the Project Owner until acceptance of the work.
APPENDICES
-- Financial data
Key consolidated data
Q1 Q1
In EUR millions 2022
2021
Revenue 279.0 285.9
-- Of which Housing 235.2 247.3
-- Of which Commercial properties 41.3 36.3
-- Of which Other 2.5 2.3
Gross margin 48.3 49.4
Gross margin (%) 17.3% 17.3%
EBIT* 21.0 21.9
EBIT margin (%) 7.5% 7.7%
Attributable net income 11.8 11.8
Attributable net income per share (EUR/share)** EUR 0.55 EUR 0.54
*EBIT corresponds to current operating income, i.e., gross margin minus current operating expenses.
**Based on the number of shares that make up the share capital of Kaufman & Broad SA, i.e., 22,088,023 shares at February 28, 2020 and 21,713,023 shares at February 28, 2021 (following the capital reduction of 375,000 treasury shares completed on February 5, 2021).
Consolidated income statement*
Q1 Q1
In EUR thousands 2022
2021
Revenue 279,013 285,915
Cost of sales -230,723 -236,501
Gross margin 48,290 49,413
Selling expenses -4,701 -3,922
Administrative expenses -16,222 -15,427
Technical and after-sales service expenses -5,830 -5,258
Development and program expenses -555 -2,898
EBIT 20,983 21,908
Other non-recurring income and expenses - -
Operating income 20,983 21,908
Cost of net financial debt -2,844 -2,229
Other financial income and expenses - -
Income tax -3,775 -5,577
Share of income (loss) 1,338 709
of equity affiliates and joint ventures
Consolidated net income 15,701 14,812
Non-controlling interests 3,885 3,010
Attributable net income 11,816 11,802
*Not approved by the Board of Directors and not audited.
Consolidated balance sheet*
In EUR thousands February 28, November 30,
2022 2021
ASSETS
Goodwill 68,661 68,661
Intangible assets 91,637 91,157
Property, plant and equipment 17,634 17,364
Right-of-use assets 15,514
21,870
11,392 10,537
Associates and joint ventures
Other non-current financial assets 7,274 7,170
Deferred tax assets 706 791
Non-current assets 219,173 211,194
Inventory 449,787 421,876
Trade receivables 474,510 456,548
Other receivables 176,006 187,618
Cash and cash equivalents 86,484 189,460
Prepaid expenses 1,340 588
Current assets 1,191,310 1,256,344
TOTAL ASSETS 1,410,483 1,467,537
February 28, November 30,
2022 2021
LIABILITIES
Share capital 5,541 5,645
Additional paid-in capital 240,748 205,629
Attributable net income 11,816 43,866
Attributable shareholders' equity 258,105 255,140
Non-controlling interests 13,863 12,566
Shareholders' equity 271,968 267,707
Non-current provisions 32,920 31,998
Non-current financial liabilities 152,936 149,392
Long-term financial lease liabilities 14,763 10,342
Deferred tax liabilities 44,715 41,362
Non-current liabilities 245,334 233,094
Current provisions 4,879 4,660
Other current financial liabilities 6,699 4,212
Short-term financial lease liabilities 6,423 4,647
Trade payables 764,783 800,550
Other liabilities 109,046 151,537
Prepaid income 1,552 1,131
Current liabilities 893,182 966,737
TOTAL LIABILITIES 1,410,483 1,467,537
*Not approved by the Board of Directors and unaudited
.
-- Operating data
Housing Q1 Q1
2022 2021
Revenue (EURM excl. VAT) 235.2 247.3
-- Of which apartments 229.3 227.9
-- Of which single-family homes in communities 5.8 19.4
Deliveries (EHUs) 1,348 1,383
-- Of which apartments 1,324 1,299
-- Of which single-family homes in communities 24 84
Net orders (number) 1,237 1,144
-- Of which apartments 1,147 1,138
-- Of which single-family homes in communities 90 6
Net orders (EURM incl. VAT) 278.0 234.3
-- Of which apartments 252.2 231.9
-- Of which single-family homes in communities 25.8 2.5
Property supply at end of period (number) 1,873 1,872
Backlog at end of period
-- In value (EURM excl. VAT) 2,278.7 2,332.6
-- Of which apartments 2,124.3 2,235.6
-- Of which single-family homes in communities 154.4 97.1
-- In months of business 24.9 29.8
End-of-period land reserve (number) 34,199 36,177
Commercial Property Q1 Q1
2022 2021
Revenue (EURM excl. VAT) 41.3 36.3
Net orders (EURM incl. VAT) 0 38.4
Backlog at end of period (EURM excl. VAT) 1,095.4 1,239.8
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Regulatory filing PDF file File: 1st quarter 2022 results
1328883 14-Apr-2022 CET/CEST
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April 14, 2022 12:36 ET (16:36 GMT)
