You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. 
Text: On the call are Jeff Mezger, chairman, president, and chief executive officer; Matt Mandino and Rob McGibney, executive vice presidents and co-chief operating officers; Jeff Kaminski, executive vice president and chief financial officer; Bill Hollinger, senior vice president and chief accounting officer; and Thad Johnson, senior vice president and treasurer.
And with that, here is Jeff Mezger.
We had a remarkable year in 2021, producing revenue growth in excess of 35% and an increase in our earnings per share of more than 90%.
We achieved our objectives of expanding our scale and profitability, driving our return on equity up by over 800 basis points to 20%.
Our results are even more notable considering they were accomplished despite the supply chain challenges and municipal delays that were pervasive throughout the year as our teams have been successfully navigating these issues.
As we begin 2022, we are poised to continue delivering returns-focused growth.
Our backlog value of $5 billion, which grew 67% year over year provides a strong base to support our roughly $7.4 billion in expected revenues in 2022.
This represents substantial top-line expansion, which combined with our expectation of a dramatic increase in our gross margin to nearly 26% will drive our return on equity meaningfully higher.
With respect to the fourth quarter, we generated total revenues of $1.7 billion and diluted earnings per share of $1.91, representing a year-over-year increase of more than 70% on the bottom line.
We achieved an operating income margin approaching 12%, resulting in a 28% expansion in our operating profit per unit to over $56,000.
In addition to this significant profit growth, our business is generating a healthy level of cash flow, and we remain consistent in our balanced approach toward allocating this capital.
Disciplined investment in community count growth is our top priority.
And in 2021, we put over $2.5 billion to work in land acquisition and development.
We expanded our lot position to nearly 87,000 lots under control, which is almost 30% higher from year-end 2020.
Our lot position is diversified both across and within our regions, and we own all of the lots that we need for our anticipated 2022 delivery goals.
We also now own or control the lots that we need for sustained growth in 2023.
In addition to reinvesting in our business, we returned over $240 million in cash to stockholders through the share repurchases that we completed in our third quarter, along with our quarterly dividend, and we reduced our debt during the year by over $60 million.
Throughout 2021, we implemented price increases across nearly all of our communities, along with managing lot releases to balance pace, price, and production in order to optimize each asset.
Although costs rose as we move through the year, our pricing strength outpaced the rate of cost inflation, driving our backlog margins higher.
This dynamic continued in our fourth quarter contributing to a rise in our net order value of 12% year over year despite net orders decreasing 10%, a level similar to the decline in our community count.
This increase in net order value contributed to a backlog value that is more than 65% higher.
With the extension of our cycle times, most of the pricing power we experienced in 2021 will be reflected in our gross margin beginning in our 2022 second quarter.
In addition, our results will continue to benefit from structural tailwinds, including the performance of our more recently opened communities, where margins are running in excess of the company average.
The ongoing rotation into a higher quality mix of assets as the impact from reactivated communities continues to diminish, a reduction in amortized interest, and the impact that higher monthly deliveries per community has on field overhead.
All of these factors combined are driving our expectation of a gross margin of nearly 26% for this year.
We successfully opened 130 new communities in 2021, our largest number in many years, including 33 in the fourth quarter.
The higher lot count that I mentioned will enable us to accelerate our new community openings in 2022.
As a result, we now expect to end 2022 with about 265 communities, up over 20% year over year and ahead of our initial projection that we shared in September.
In addition of supporting our roughly 30% increase in revenue planned for 2022, our community count expansion will also contribute to our growth in 2023.
Our monthly absorption per community of 5.5 net orders during the fourth quarter, reflected a typical seasonal pattern sequentially.
For the year, our absorption pace averaged 6.3 net orders per community per month, the best annual rate we have seen in more than a decade.
Homebuyers value the choice and personalization inherent in our built-to-order model, which we believe is the primary reason that we have long generated among the highest absorption rates and the rates will rise this year.
And with the strong home price appreciation the market has experienced, it is appropriate to spend a moment addressing affordability.
Our strategy is to target the median household income of a submarket, positioning our homes to be attainable by the largest segment of buyers.
We strive to be below the median new home price and had a reasonable medium -- had a reasonable premium to the median resale price when we open a community and then be opportunistic in raising price based on demand at that location once opened.
Our average selling price on deliveries rose about 9% year over year in 2021, well below the reported increase for overall pricing levels nationally, highlighting the affordability of our locations and products.
As we have discussed on previous calls, we track a number of internal key indicators to gauge changes in consumer behavior that could signal affordability challenges, which we are not seeing at this time.
One of the most telling of these is the square footage of homes that buyers are selecting as they will typically rotate down to a smaller home if they need to in order to achieve homeownership.
Although we offer floor plans below 1,600 square feet in about 80% of our communities, buyers continue to choose larger footage homes.
Over the past year, our deliveries have averaged between 2,000 and 2,100 feet, consistent with our historical trend.
And our homes in backlog are slightly above that range.
We also look at our studio revenues and lot premiums, which we view as discretionary spending for our buyers.
We would expect to see a decline if buyers are stretched, but our studio revenues and lot premiums have increased even as base prices have risen.
On a combined basis, buyers spent about $48,000 per home in these two categories in the fourth quarter, a solid enhancement to our revenues.
Finally, and perhaps most importantly, is the credit profile of our buyers.
Their average FICO score in the quarter was 732, an all-time high.
In addition, about two-thirds of our buyers qualified for a conventional mortgage, and our buyers overall are averaging a down payment of over $67,000.
Taken together, these metrics illustrate our buyers' strong credit.
I'll also note that the recent increases in loan limits, both conventional and FHA should help with mortgage financing, provided an incremental benefit to the industry.
We started over 3,800 homes during the quarter as we worked to position our production for growth in 2022 deliveries.
At year-end, we had over 9,100 homes in production with 90% of these homes already sold.
Generally, our cancellation rate once we start the home is extremely low, and at 5% in the fourth quarter, it remains so.
We're reflecting our customers' strong desire to purchase their personalized homes.
As to build times, while they expanded about two weeks sequentially in the quarter, we are encouraged to see some signs of stabilization.
Construction times in November and December were consistent with September and October, pointing to a leveling out over the last four months.
Our projections for this year, assume that we hold at these levels, and depending on timing, any improvement in build times could increase our expected closings in the latter part of this year.
Our backlog is comprised of over 10,500 homes with a value of $5 billion, representing the bulk of our revenues expected for 2022.
One aspect of our built-to-order business model that tends to get overlooked is the dynamic between our revenue growth and community count.
In our count, we do not include communities that we consider to be sold out, meaning that they have less than five homes left to sell.
That doesn't mean the community has closed out and that those communities will continue to contribute to our revenues and profits.
In fact, our backlog includes almost 1,900 homes from 150 sold-out communities that will deliver approximately $1 billion in 2022 revenues.
While we have not seen a slowdown in demand across our geographic footprint in the past couple of months, and we foresee a strong spring selling season ahead, a combination of factors has resulted in a negative year-over-year net order comparison for the first six weeks of this quarter at 17%.
In the prior year, net orders throughout December and into 2021 were particularly strong creating a difficult comparison.
As the first quarter progresses, and we benefit from the additional community openings we have scheduled, along with easier weekly comparisons, we expect to end the quarter with net orders down about a mid-single-digit percentage year over year, similar to our anticipated decline in average community count for the quarter.
Market conditions remain very healthy as favorable demographics, low mortgage interest rates, and an extremely limited supply of homes, particularly for first-time buyers continue to drive demand.
Specific to KB Home, we believe the location of our communities, price point of our products, and the ability to choose and personalize homes in our built-to-order approach are compelling for buyers.
Shifting gears for a moment.
2021 was also marked by solid progress in our environmental, social, and governance initiatives.
KB Home was once again recognized with multiple honors from the U.S. Environmental Protection Agency, leading our industry with the ENERGY STAR Partner of the Year Award, a record number of ENERGY STAR Market Leader Awards and once again being the only homebuilder to receive the WaterSense Sustained Excellence Award.
Our environmental program is robust, and we are proud that our homes have the lowest national average HERS score among production builders with a long track record of annual improvement in this key metric, which we expect to continue in 2022.
Our ESG leadership is being recognized as KB Home is the only national builder named to Newsweek's list of America's most responsible companies for the second year in a row.
We've significantly increased our volume in 2021 amid the most challenging and fluid operating conditions that I have seen in my homebuilding career.
These results came about from the determined and relentless efforts of our entire team.
In closing, 2021 was a rewarding year for KB Home.
In addition to generating significant revenue and earnings growth, we also produced substantial increases in our book value per share and our return on equity.
Alongside these meaningful financial results, we maintain our leadership in providing the highest customer satisfaction levels among large production homebuilders and continue to drive innovation through the introduction of energy-efficient and healthier home features.
As a result of these and many other factors, KB Home was named to the list of the 250 most effectively managed companies in the U.S., a ranking that was developed by the Drucker Institute in conjunction with The Wall Street Journal.
As we look to the year ahead, during which we will celebrate our 65th anniversary, we anticipate another year of remarkable growth, which we expect will ultimately drive a return on equity of more than 26%.
We look forward to sharing our progress with you as 2022 unfolds.
I will now cover highlights of our financial performance for the 2021 fourth quarter and full year, as well as provide our outlook for the 2022 first quarter and full year.
We finished 2021 with strong fourth-quarter results, including significant year-over-year growth in revenues and a 310-basis-point expansion in our operating margin that drove a 71% increase in our diluted earnings per share.
While we faced supply chain issues that extended our cycle times, as well as construction cost inflation challenges during 2021, our exceptional portfolio of communities and solid operational execution, along with the strong housing market generated impressive full-year results that I will summarize in a few minutes.
With a robust 2021 ending backlog value of nearly $5 billion and 29% year-over-year expansion in the number of lots owned or controlled, we are well-positioned for continued meaningful growth in revenues, community count, earnings per share, and returns in 2022.
In the fourth quarter, our housing revenues of $1.66 billion were up 39% from a year ago, reflecting a 28% increase in homes delivered and a 9% increase in their overall average selling price.
Housing revenues were up significantly in all four of our regions, ranging from a 28% increase in the Central region to 114% in the Southeast.
Looking ahead to the 2022 first quarter, we anticipate housing market conditions will continue to be favorable with strong homebuyer demand while we navigate expected continued supply chain challenges.
For the 2022 first quarter, we expect to generate housing revenues in the range of $1.43 billion to $1.53 billion.
For the 2022 full year, assuming no change in supply chain dynamics, we are forecasting housing revenues in the range of $7.2 billion to $7.6 billion, up over $1.7 billion or 30% at the midpoint as compared to 2021.
Having ended our 2021 fiscal year with our highest year-end backlog level since 2005, along with our expectations for a higher community count and continued strong housing market conditions, we believe we are well-positioned to achieve this top-line performance for 2022.
In the fourth quarter, our overall average selling price of homes delivered increased to approximately $451,000.
Reflecting our higher average selling price per net order in recent quarters, we are projecting an average selling price of approximately $472,000 for the 2022 first quarter.
For the 2022 full year, we believe our overall average selling price will be in the range of $480,000 to $490,000.
Homebuilding operating income for the fourth quarter totaled $214.4 million, up 85% as compared to $115.7 million for the year-earlier quarter.
The current quarter included inventory-related charges of approximately $700,000 versus $11.7 million a year ago.
Our operating margin was 12.8%, up 310 basis points from the 2020 fourth quarter.
Excluding inventory-related charges, our operating margin was 12.9% as compared to 10.7% a year ago, reflecting improvements in both our gross margin and SG&A expense ratio.
We anticipate our 2022 first quarter homebuilding operating income margin, excluding the impact of any inventory-related charges, will be approximately 12%, compared to 10.4% for the year-earlier quarter.
For the 2022 full year, we expect this metric to be in the range of 15.7% to 16.5%, which represents a significant year-over-year improvement of 450 basis points at the midpoint, reflecting continued positive momentum in both our gross margin and SG&A expense ratio.
Our 2021 fourth-quarter housing gross profit margin improved 230 basis points from the year-earlier quarter to 22.3%.
Excluding inventory-related charges, our gross margin for the quarter reflected a year-over-year increase of 140 basis points to 22.4%.
The year-over-year improvement primarily reflected the impact of higher selling prices and lower amortization of previously capitalized interest, partly offset by higher costs for lumber and other construction materials and labor.
We are forecasting a housing gross profit margin for the first quarter in the range of 22% to 22.6%, representing the low point for the year.
We anticipate significant sequential expansion in quarterly gross margin during 2022, mainly driven by price increases that have outpaced cost pressures in our established communities, strong selling margins in our recently opened communities, and an expected reduction in amortization of previously capitalized interest.
For the full year, we expect this metric will be in the range of 25.4% to 26.2%, an increase of 400 basis points at the midpoint as compared to 2021.
Our selling, general, and administrative expense ratio of 9.8% for the fourth quarter improved 50 basis points from a year ago, mainly reflecting enhanced operating leverage due to higher revenues, partly offset by increased performance-based compensation expenses and costs to support our expanding scale.
We are forecasting our 2022 first quarter SG&A ratio to be approximately 10.4%, an improvement of 30 basis points versus the prior year as expected favorable leverage impact from an anticipated year-over-year increase in housing revenues are partially offset by increased investments in personnel and other resources to support a projected meaningful expansion in community count.
We expect that our 2022 full-year SG&A expense ratio will be in the range of 9.4% to 9.9%.
Our income tax expense of $49.7 million for the fourth quarter, which represented an effective tax rate of approximately 22%, was favorably impacted by $7 million of federal energy tax credits, reflecting another benefit of our industry-leading sustainability initiatives.
We currently expect our effective tax rate for the 2022 first quarter and full year to be approximately 25%, both excluding any favorable impacts from energy tax credits.
Federal legislation extending the availability of tax credits for building energy-efficient homes in 2022 has not yet been enacted.
If the Section 45L tax credit is extended at its current level, our 2022 effective tax rate would be favorably impacted by approximately 200 basis points.
Overall, we reported net income of $174.2 million or $1.91 per diluted share for the fourth quarter, a notable improvement from $106.1 million or $1.12 per diluted share for the prior-year period.
Reflecting on the full year, we are very pleased with our strong 2021 financial results.
We increased our housing revenues by 37% to nearly $5.7 billion, expanded our operating margin by 400 basis points to 11.6% with measurable improvements in both our gross margin and SG&A expense ratio, and reported $6.01 of diluted earnings per share, an increase of 92%.
We also completed $188 million of share repurchases, refinanced $390 million of our senior notes, resulting in annualized savings of $16 million of incurred interest, and improved our year-end leverage ratio by 380 basis points.
Turning now to community count.
Our fourth quarter average of 214 was down 9% from 234 in the corresponding 2020 quarter and up 4% sequentially.
We ended the year with 217 communities down 8% from a year ago and up 3% sequentially.
We expect our 2022 first-quarter ending community count to remain relatively flat sequentially and represents a low point for 2022.
On a year-over-year basis, we anticipate our 2022 first-quarter average community count will be down by a low single-digit percentage.
We expect our quarter-end community count to increase sequentially through the remainder of the year starting in the second quarter as openings each quarter are expected to outpace sell-outs.
We anticipate ending the year with a 20% to 25% increase in our community count, supporting additional top-line growth in 2023 and beyond.
During the fourth quarter, to drive future community openings, we invested $622 million in land and land development with $258 million or 41% of the total representing land acquisitions.
In 2021, we invested over $2.5 billion in land acquisition development, compared to $1.7 billion in the previous year.
At year-end, our total liquidity was approximately $1.1 billion including $791 million of available capacity under our unsecured revolving credit facility.
Our debt-to-capital ratio improved to 35.8% at year-end 2021, compared to 39.6% the previous year.
We expect to generate significant cash flow in the current year to fund land investments supporting our targeted 2022 and future years' growth in community count and housing revenues.
Our 2021 year-end stockholders' equity was $3.02 billion as compared to $2.67 billion a year ago, and our book value per share increased by 18% to $34.23.
Finally, one of the most notable 2021 achievements was our significant improvement in return on equity to 19.9% for the full year, a year-over-year expansion of over 800 basis points.
Given our current backlog and community opening plans and the expected continued strength in the housing market, we are confident that we will generate significant year-over-year improvements in our key 2022 financial metrics.
We plan to continue to execute on the principles of our returns-focused growth strategy with an emphasis on meaningfully improving our returns by increasing our community count and top line while producing further expansion in our operating margin.
In summary, using the midpoints of our guidance ranges, we expect a 30% year-over-year increase in housing revenues and significant expansion of our operating margin to 16.1% driven by improvements in both gross margin and our SG&A expense ratio.
These in turn should drive our return on equity of over 26% up and excess of 600 basis points from 19.9% in 2021.
This outlook reflects our view that with our returns-focused growth strategy, attractive business model, seasoned leadership team, and continued favorable housing conditions, we will be able to further and meaningfully enhance long-term stockholder value in 2022.
Alex, please open the lines.

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q4 earnings per share $1.91.
net order value for q4 expanded by $184.3 million, or 12%, to $1.77 billion.
ending backlog grew 35% to 10,544 homes at quarter-end.
qtrly homes delivered rose 28% to 3,679.
sees fy 22 average selling price in range of $480,000 to $490,000.

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