Q : What are the expectations for order pace in the first quarter and throughout 2025? A : Jeffrey Mezger, Chairman and CEO, confirmed that the company expects order pace to be similar to 2024, with fluctuations month-to-month. The company anticipates a higher pace from new community openings, which typically sell better initially. The focus is on maintaining a consistent absorption rate with the increase in community count.

Q : What factors could influence the gross margin range of 20% to 21% for 2025? A : Jeff Kaminski noted that the primary factor influencing the gross margin range is the volatility in mortgage rates, which affects affordability. The company bases its margin estimates on backlog margins and fixed cost leverage. Sequentially, the decline in margin from the fourth quarter to the first quarter is due to lower volume and less leverage on fixed costs.

Q : How is KB Home addressing potential impacts from the Southern California fires on its operations? A : Jeffrey Mezger stated that while the fires are ongoing, the company does not expect a significant impact on labor or material availability. The focus is on monitoring the situation and being nimble with utilities and infrastructure rebuilding. The company anticipates a gradual rebuilding process rather than a sudden increase in housing starts.

Q : How is KB Home managing incentives and concessions in response to market conditions? A : Robert Mcgibney, President and COO, explained that the company did not significantly change the level of incentives during the fourth quarter, despite rising rates. The approach is to find the right deal for buyers and adjust incentives as needed, particularly as the company enters the spring selling season. The focus remains on optimizing each asset for the highest returns.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .

This article first appeared on GuruFocus .