KB Home (KBH: Quote) reported Friday a turnaround to profit in its third quarter, reflecting higher home deliveries, increase in selling prices and margins, as well as an income tax- benefit compared to the prior year. Company-wide net orders increased 3 percent from last year. The home builder believes it is well-positioned to capitalize its growth opportunities as the housing market recovery progresses.
For the quarter, the company delivered 1,720 homes, up 7 percent from last year. Three of its four homebuilding regions recorded year-over-year increases in deliveries. The Los Angeles, California-based company's overall average selling price improved 8 percent to $245,100.
Gross profit margin grew 60 basis points to 17.5 percent from a year earlier. Excluding inventory impairment charges, housing gross profit margin was 19 percent.
Net order value increases 16 percent to $493.3 million. Backlog value at the end of the period was up 33 percent to $744.7 million. The number of homes in the company's backlog also increased 18 percent to 3,142.
Jeffrey Mezger, president and chief executive officer of the company said, "During the quarter, we continued to generate improvement in several key financial and operating metrics. The favorable year-over-year performance in our deliveries; revenues; operating income; net orders; and backlog were particularly encouraging as we operated with fewer communities."
According to the company, one of the impacts of its strategic repositioning was a decline in community count, which has moderated its net order growth. "Although our community count will bottom in the fourth quarter, we expect to reverse this trend in 2013," Mezger added.
For the third quarter, KB Home posted a net income of $3.26 million or $0.04 per share, compared to a loss of $9.65 million or $0.13 per share in the previous year.
On average, 21 analysts polled by Thomson Reuters expected loss of $0.16 per share for the quarter. Analysts' estimates typically exclude one-time items.
The company said its recent-quarter results included an income tax benefit of $10.7 million, mainly due to the resolution of a federal income tax audit.
Quarterly revenues grew 16 percent to $424.5 million, reflecting growth in number of homes delivered and a higher average selling price. Analysts estimated revenues of $430.03 million for the quarter.
KBH closed Thursday's regular trading at $13.11 on the NYSE. In the pre-market activity, the shares are down 0.61 percent.
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by RTT Staff Writer
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