New Home Orders Increase 62 Percent at KB Home

Written by: Steve Cook   Fri, September 25, 2009 Beyond Today's News, Crisis Watch

KB Home (NYSE:KBH), the nation’s fifth largest home builder, said orders increased 62 percent and 27 percent fewer consumers cancelled contracts during the third quarter, compared with 51 percent a year ago.  It recently announced it has resumed homebuilding operations in the Washington, D.C. metro market, and is bolstering its presence in the southeastern United States.

Yet the Los Angeles-based company reported an overall net loss of $66 million on revenues of $458.5 million, a deeper loss than analysts predicted and KB’s shares fell eight percent in morning trading on the New York Stock Exchange.  Homes delivered have fallen 20 percent and the average selling price is off 15 percent in the past 12 months.

“We are encouraged by the positive net order results we achieved in the quarter but remain cautious given the current economic climate. While we have more work to do to return to profitability, we believe we are making progress on many fronts toward this goal,” said CEO Jeff Mezger.

Mezger said the housing market remains in transition and the timing of it rebound ist still uncertain.  “In this challenging environment, we significantly narrowed our third quarter net loss from a year ago through the disciplined execution of our strategic initiatives,” he said. “Restoring the profitability of our homebuilding business remains our highest priority, and we continue to take actions to achieve this objective.”

In the third quarter of 2009, the company reduced its homebuilding operating loss by $65.7 million from the year-earlier quarter and improved its housing gross margin by 7.2 percent to 11.1 percent in the third quarter of 2009 from 3.9 percent in the third quarter of 2008. Selling, general and administrative expenses totaled $83.9 million in the third quarter of 2009, a 37 percent decrease from $133.2 million in the year-earlier period. As a percentage of housing revenues, selling, general and administrative expenses were 18.5 percent in the third quarter of 2009, compared to 19.9 percent  in the third quarter of 2008.

Leave a Reply