KB Home (KBH) on Friday reported a loss for the first quarter that narrowed from last year, reflecting higher home deliveries and selling prices. However, company-wide net orders declined 8 percent from last year.
The home builder's loss per share for the quarter was wider than analysts' estimates and revenues missed their expectations. The company's shares are down 15 percent in the pre-market.
Looking ahead, the company expects to achieve profitability later in the year.
The Los Angeles, California-based company's home deliveries in the quarter rose 21 percent from the year-ago period to 1,150. Three of the company's four regions recorded higher deliveries.
The average selling price rose 6 percent from last year to $219,000, reflecting increases in the company's West Coast and Southwest regions. These were partly offset by decreases in the Central and Southeast regions.
Meanwhile, housing gross margin contracted 290 basis points from last year to 9.7 percent.
Company-wide net orders declined 8 percent to 1,197 homes, reflecting a higher cancellation rate. KB Home noted that a 22 percent increase in its Central region was more than offset by decreases in each of its three other regions.
Jeffrey Mezger, president and chief executive officer of KB Home, said, "We ended the quarter with a higher backlog compared to a year ago, although our orders moderated. At the same time, we posted growth in our deliveries and revenues and reduced our net loss significantly from the prior year."
KB Home's first-quarter net loss was $45.80 million or $0.59 per share, narrower than loss of $114.53 million or $1.49 per share in the prior-year quarter. In the preceding fourth quarter, the company had recorded its first quarterly profit of 2011.
On average, 22 analysts polled by Thomson Reuters expected the company to report loss of $0.24 per share for the quarter. Analysts' estimate typically excludes one-time items.
Total revenues for the quarter grew 29 percent to $254.56 million from $196.94 million in the same quarter last year, but missed analysts' consensus estimate of $337.72 million.
The increase in revenues reflect higher deliveries and an increase in the average selling price. Home building revenues also grew 29 percent to $251.90 million.
Backlog as at February 29, 2012 totaled 2,203 homes, up 30 percent from the same period last year. This represents potential future housing revenues of about $460 million.
Looking ahead, KB Home noted that the strategic actions that it implemented towards the end of last year would have a more pronounced impact as the year unfolded.
Mezger said, "We believe these steps, along with the benefits of working with our new preferred mortgage lender, Nationstar Mortgage, in the coming quarters will generate further momentum in our business and, when combined with a stronger housing environment, should enable us to achieve profitability later this year."
The company recently announced that it entered into a deal under which Nationstar Mortgage will become its preferred mortgage lender.
KBH closed Thursday's trading at $11.24, down $0.07 on 8.37 million shares. In Friday's pre-market, the stock is down $1.74 or 15.48 to $9.50.
by RTT Staff Writer
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