KB Home’s First-Quarter Loss Narrows as House Sales ClimbPrashant Gopal
KB Home, the best-performing U.S. homebuilder stock this year, reported a narrower loss for its fiscal first quarter as sales and prices climbed amid a nationwide rebound in housing construction.
The net loss for the three months ended Feb. 28 was $12.5 million, or 16 cents a share, compared with $45.8 million, or 59 cents, a year earlier, the Los Angeles-based company said today in a statement. Analysts expected a loss of 22 cents a share, the average of 17 estimates compiled by Bloomberg.
U.S. builders are benefiting as a tight supply of existing homes for sale and mortgage rates near record lows boost demand for new properties. Housing permits for future construction climbed last month to the fastest pace since June 2008, the Commerce Department said this week. KB Home has been able to increase prices as it focuses on land-constrained markets with higher-income households and greater demand for larger homes.
“We have created momentum in our growth trajectory and we now want to take it up even further,” Jeffrey Mezger, president and chief executive officer, said in a conference call with analysts today. “With markets now recovering at an accelerated pace, it is the right time to really push the accelerator on growth.”
KB Home shares increased 2.5 percent to $22.10 at the close in New York. It was the only stock with a gain in the 11-member Standard & Poor’s Supercomposite Homebuilding Index, which slipped 2 percent.
The company’s first-quarter revenue jumped 59 percent from a year earlier to $405.2 million. Net orders rose 40 percent percent to 1,671 homes. Contract backlog, an indication of future sales, climbed 25 percent to 2,763 homes.
The average selling price increased 24 percent to $271,300, the highest first-quarter price since 2006.
The company plans to open more than 120 new communities during the fiscal year. By the fourth quarter, the average number of communities will be about 15 percent greater than a year earlier, Chief Financial Officer Jeff Kaminski said during the conference call.
The company invested 75 percent of its money for buying development sites in the West, Kaminski said.
“California is a major contributor to our improved results this quarter,” Mezger said. “This state features a large and diverse population and economy, and due to the inherent land constraints and entitlement process, even in the peak years of the last cycle, housing demand was still not met.”
KB Home gained 40 percent this year, the best performance in the S&P homebuilding index, which advanced 16 percent.