KB Home Turns To Profit In Q2, Results Beat View

(RTTNews) - Home builder KB Home (KBH) on Friday reported a turnaround to profit in the second quarter, reflecting growth in home building revenues and margins due to higher selling prices. Both earnings per share and revenue for the quarter beat analysts' estimates. The company said it is on track to meet its fiscal 2014 goals.

Jeffrey Mezger, president and chief executive officer of KB Home said, "The sustained progress in our results demonstrates the success of our targeted land and land development investments across our operating footprint, the appeal of our product designs and unique home buying experience, as well as our sound growth platform, which enables us to efficiently leverage costs as we expand."

The Los Angeles, California-based company's net income for the second quarter was $26.62 million or $0.27 per share, compared to net loss of $2.97 million or $0.04 per share in the prior-year quarter.

On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $0.20 per share for the quarter. Analysts' estimate typically excludes one-time items.

Total revenues for the quarter grew 8 percent to $565.01 million from $524.41 million in the same quarter last year, and beat analysts' consensus estimate of $563.10 million.

The increase in revenues was due to growth in the company's housing revenues from higher average selling prices. The overall average selling price of $319,700 for the quarter rose 10 percent from the year-ago period.

Average selling prices were higher across all of the company's homebuilding regions compared to the year-ago period, with increases ranging from 9 percent in the Southeast region to 23 percent in the Southwest region.

Home building revenues also increased 8 percent to $562.40 million. The company delivered 1,751 homes at an average selling price of $319,700 during the latest quarter, compared to 1,797 homes delivered at an average selling price of $290,400 in the year-ago quarter.

Home building operating margins expanded 440 basis points to 6.1 percent, while housing gross profit margin increased 380 basis points to 18.9 percent.

Company-wide net orders for the quarter rose 5 percent from the prior-year period to 2,269 homes. The overall value of net orders for the quarter rose 19 percent from last year to $763.16 million. Each of the company's four homebuilding regions reported year-over-year growth in net order value.

Backlog at the end of the second quarter was 3,398 homes, representing potential future housing revenues of about $1.03 billion, up 24 percent from $826.61 million in the same period last year.

The company noted that its quarter-end backlog value exceeded $1 billion for the first time since August 31, 2008.

Looking ahead, Mezger said, "We expect to measurably expand our community count into 2015 with the significant investments we are making in our land pipeline. We believe that with these and other strategic initiatives we have underway and the performance improvements we have delivered over the past several quarters, we are well positioned for accelerated revenue growth and profitability going forward."

KBH closed Thursday's trading at $17.88. In Friday's pre-market, the stock is up $0.39 or 2.18 percent to $18.27.