KB Home Turns To Profit In Q1, Results Beat View

(RTTNews) - Home builder KB Home (KBH) on Wednesday reported a turnaround to profit in the first quarter on higher home building revenues and margins in addition to a one-time gain. Both earnings per share and revenue for the quarter beat analysts' estimates.

Jeffrey Mezger, president and chief executive officer of KB Home said, "Building on the momentum and the full-year profitability our business achieved in 2013, we posted net income in the first quarter for the first time since 2007, along with higher average selling prices, increased revenues, expanded gross margins and improved operating leverage."

The Los Angeles, California-based company's net income for the first quarter was $10.56 million or $0.12 per share, compared to net loss of $12.46 million or $0.16 per share in the prior-year quarter.

On average, 21 analysts polled by Thomson Reuters expected the company to report earnings of $0.08 per share for the quarter. Analysts' estimate typically excludes one-time items.

The latest quarter's results include a gain of $3.2 million on the sale of the company's interest in an unconsolidated joint venture in Maryland.

Total revenues for the quarter grew 11 percent to $450.69 million from $405.22 million in the same quarter last year, and beat analysts' consensus estimate of $435.30 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 11 percent to $448.27 million, reflecting revenue growth in three of the company's four home-building regions amid improved average selling prices.

The company delivered 1,442 homes at an average selling price of $305,200 during the latest quarter, compared to 1,485 homes delivered at an average selling price of $271,300 in the year-ago quarter. The company recorded lower home deliveries in the West Coast homebuilding region.

Home building operating margins improved by 390 basis points to 4 percent, while housing gross profit margin expanded 290 basis points to 17.7 percent.

Company-wide net orders for the quarter rose 6 percent from the prior-year period to 1,765 homes. The overall value of net orders for the quarter rose 18 percent from last year to $600.17 million. Each of the company's four homebuilding regions reported year-over-year growth in net order value.

Backlog at the end of the quarter was 2,880 homes, representing potential future housing revenues of about $851.55 million, up 21 percent from $703.89 million last year.

Looking ahead, Mezger said, "We are entering the spring selling season positioned with more communities open in attractive locations across the country, and we are confident that our balanced approach to sales price and pace, combined with our focus on both top-line growth and profitability, will produce strong results in the coming quarters."

KBH closed Tuesday's trading at $17.68. In Wednesday's pre-market, the stock is up $1.31 or 7.41 percent to $18.99.