Kb Home Liquidation Value

KB Home (KBH) reported for the quarter ended February 28, 2026. Under a liquidation lens, recovery to equity is constrained by the nature of the asset base: inventory dominates at $5.70B (tagged InventoryOperativeBuilders), representing approximately 85% of total assets of $6.70B. At a 60% haircut, inventory yields roughly $3.42B in liquidation recovery, versus a carrying value implying no impairment credit. Cash and equivalents of $200.5M recover at par. The operating lease ROU asset ($25.9M) and PP&E (implied in the $13.2M quarterly capex run-rate; total PP&E not separately tagged but embedded in total assets) recover at distressed rates.

On the liability side, notes payable stand at $1.89B — up $200M QoQ from a zero Credit Facility draw at November 30, 2025 to $200M outstanding at February 28, 2026, plus $358M Term Loan and $1.33B senior notes. Total liabilities implied by LiabilitiesAndStockholdersEquity ($6.70B) less StockholdersEquity ($3.86B) = approximately $2.85B. Accrued liabilities total $667M; self-insurance reserve $180M; warranty accrual $103M — all face-value claims in liquidation.

Gross liquidation math: Haircutted assets — cash $200M (100%), inventory ~$3.42B (60%), other assets nominal — sum approximately $3.65–3.75B. Face-value liabilities — notes $1.89B, accrued liabilities $667M, operating lease liability $28M, warranty $103M, self-insurance $180M, deferred revenue $27M, employee benefits $98M, taxes payable $12M, interest payable $18M — aggregate approximately $3.02B. Residual to equity: approximately $0.6–0.7B, substantially below the $3.86B book equity figure. The asymmetry is structural: inventory at cost exceeds what a forced liquidation would recover.

Since the prior filing (10-K for year ended November 30, 2025), the material change to the liability stack is the $200M Credit Facility draw, increasing total debt from $1.69B to $1.89B, a 12% increase. Cash declined modestly from $228.6M to $200.5M. Inventory (owned and controlled) carried value rose slightly from $5.67B to $5.70B. Stockholders' equity contracted from approximately $3.93B (implied from prior filing) to $3.86B, driven by the $50M share repurchase, $17.3M dividend, and modestly offset by $33.4M net income. Backlog value fell 23% year over year to $1.70B, signaling reduced forward conversion pipeline, which directionally pressures inventory recovery assumptions. Filing discusses land option contract future purchase commitments of approximately $1.82B ($949.5M remainder of 2026 through 2029) in MD&A but does not separately tag these contingent obligations in XBRL — a material off-balance-sheet exposure under liquidation analysis where exercise is discretionary but abandonment has deposit loss implications.