KB Home Q4 Profit Surges, But Results Miss View

(RTTNews) - Home builder KB Home (KBH) on Thursday reported a profit for the fourth quarter that almost quadrupled from last year on higher home building revenues that reflected higher selling prices and margins. However, both earnings per share and revenue missed analysts' estimates.

Jeffrey Mezger, president and chief executive officer of KB Home said, "Our fourth quarter results provided a solid finish to 2013 with both revenues and profits up from the prior year. We also posted full-year net income for the first time in several years. These results reflect the positive momentum within our business throughout 2013 that delivered measurably improved financial performance, with higher revenues and better bottom-line results in each quarter of the year."

The Los Angeles, California-based company's net income for the fourth quarter was $28.12 million or $0.31 per share, up from $7.72 million or $0.10 per share in the prior-year quarter. On average, 24 analysts polled by Thomson Reuters expected the company to report earnings of $0.45 per share for the quarter. Analysts' estimate typically excludes one-time items.

Total revenues for the quarter grew 7 percent to $618.53 million from $578.20 million in the same quarter last year, but missed analysts' consensus estimate of $662.46 million.

The company noted that double-digit increases in each of the company's Southwest, Central and Southeast homebuilding regions were partly offset by a decrease in its West Coast homebuilding region.

Home building revenues also increased 7 percent to $614.57 million, reflecting revenue growth in all of the company's home building regions amid improved average selling prices.

The company delivered 2,038 homes at an average selling price of $301,100 during the quarter, compared to 2,122 homes delivered at an average selling price of $270,700 in the year-ago quarter.

Home building operating margins improved by 490 basis points to 7.6 percent, while housing gross profit margin expanded by 420 basis points to 17.9 percent.

Company-wide net orders for the quarter were essentially flat with the prior-year period at 1,556 homes. The overall value of net orders for the quarter rose 5 percent from last year to $481.7 million.

Backlog at the end of the quarter was 2,557 homes, representing potential future housing revenues of about $682.49 million, up 10 percent from $618.63 million last year.

For fiscal 2013, KB Home's net income was $39.96 million or $0.46 per share, compared to net loss of $58.95 million or $0.76 per share in the previous year. Net revenues for the year grew 34 percent to $2.10 billion from $1.56 billion in the prior year.

Analysts expected the company to earn $0.60 per share for the year on revenues of $2.14 billion.

This marked the first time the company has generated full-year net income since 2006.

Mezger said, "Looking forward, we believe we are well positioned operationally and financially for 2014."

Mezger added that the company will continue to execute its key growth initiatives, making investments in desirable land positions, optimizing selling prices and sales pace in each community to generate higher revenues, and leveraging its growth platform and the efficiencies of its operational business model to enhance profitability.

In Thursday's regular session, KBH is trading at $17.25, down $0.30 or 1.71 percent on a volume of 232,246 shares.