Homebuilder KB Home (KBH) is scheduled to release its second-quarter results before the markets open Friday. The company earlier had said that it does not foresee any meaningful improvement in market conditions for the remainder of the year, while Wall Street analysts are projecting sharply narrower net loss in the company's second quarter, despite an anticipated double-digit decline in revenues, amid the ongoing troubles in the housing market.
On average, 15 analysts polled by Thomson Reuters expect the company to report a loss of $0.64 per share for the second quarter, with estimates ranging between $1.40 loss per share and $0.03 loss per share. Analysts' estimate typically excludes special items. Revenue for the quarter is projected to be $339.13 million, representing a 46.9% fall from the previous year.
In the prior year's second quarter, the Los Angeles, California-based company had recorded a net loss of $255.9 million or $3.30 per share, and revenue of $639.1 million, which fell 55% from the prior year period, largely due to lower housing revenues.
While reporting first-quarter results in March, President and Chief Executive Officer, Jeffrey Mezger, had said, "Although we currently foresee no meaningful improvement in market conditions for the remainder of this year, we are confident that our intense customer focus and the many ongoing initiatives we have undertaken to adapt to today's difficult housing environment will continue to differentiate KB Home from its competitors and enhance our long-term performance."
Mezger had also said, "KB Home continues to operate in a national housing market that is severely challenged by inventory oversupply, declining home prices, tightening lending standards, rising unemployment and weakening consumer confidence. In response, we continue adjusting our business to these market conditions to position the company for a return to profitability. We also remain sharply focused on improving our financial results through continually reducing our costs and streamlining our organizational structure, and on maintaining a strong financial position by lowering our debt and preserving or generating cash." In the preceding first quarter, KB Home had reported a narrower loss of $58.07 million or $0.75 per share, reflecting a significant year-over-year reduction in impairment charges, although quarterly revenues tumbled 61% on lower housing revenues due to reductions in home deliveries and average selling price.
In the first quarter, the company delivered 1,445 homes at an average selling price of $210,700, while in the prior year's second quarter, the company had delivered 2,810 homes at an average selling price of $226,600.
At the end of the first quarter of 2009, KB Home had 2,651 homes in backlog representing approximately $559.8 million in future revenues, lower than a backlog of 4,843 homes representing future revenues of approximately $1.23 billion a year ago.
Founded in 1957, KB Home, with operations in ten states, constructs and sells various types of homes, including attached and detached single-family homes, town homes and condominiums, designed primarily for first-time, first move-up adult buyers. The company also offers mortgage services in a joint venture with Countrywide KB Home Loans. The company has operations in nine states.
Among other homebuilders, Lennar Corp. (LEN,LEN.B) Thursday reported a net loss of $125.19 million or $0.76 per share for the second quarter, wider than a net loss of $120.92 million or $0.76 per share last year, hurt by one-time charges, as well as a 23% decline in home sales to $788.6 million that reflected lower new home deliveries and a drop in average selling prices. The Miami, Florida-based company's revenues were $891.85 million, down from $1.13 billion a year ago.
D.R. Horton, Inc. (DHI), the largest U.S. homebuilder, in early May reported a narrower net loss of $108.6 million or $0.34 per share in its second quarter, compared to loss of $1.3 billion or $4.14 per share last year, mainly due to lower inventory impairments and land option cost write-offs. This marked the eighth consecutive quarterly loss for D.R. Horton. The Fort Worth, Texas-based company's homebuilding revenue for the second quarter dropped 52% year-over-year to $775.3 million, and it reported 3,585 home closings in the second quarter, compared to 6,719 in the second quarter of last year.
According to Donald Horton, Chairman of D.R. Horton's Board, the company saw a seasonal increase in sales activity in the March quarter. However, market conditions in the homebuilding industry are still challenging, characterized by rising foreclosures, high inventory levels of new and existing homes, increasing unemployment, tight credit for homebuyers and eroding consumer confidence.
Homebuilder Pulte Homes, Inc. (PHM) in May reported a narrower net loss for the first quarter of $514.8 million or $2.02 per share, compared to a net loss of $696.1 million or $2.75 per share in the prior year, helped by lower charges, and its cost-cutting measures. The Bloomfield Hills, Michigan-based company's consolidated revenues declined 59% from last year to $587.42 million. The company recorded a 55% decrease in closings to 2,147 homes, and an 11% decrease in average selling price to $263,000. In addition, the company said then that excellent buying conditions, combined with sharply reduced new home inventory levels will provide the setting for an eventual housing recovery.
On April 2, brokerage Credit Suisse downgraded its rating on the company to 'Underperform' from 'Neutral.' KBH closed Thursday's regular trading session at $14.77, up $1.13 or 8.28%, on a volume of 6 million shares. In the past 52 weeks, shares have been trading between $6.90 - $25.43.
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