KB Home Gets the Kids EXCITED with These Earnings

KB Home’s (NYSE:KBH) second quarter loss narrowed, beating estimates. KB Home constructs and sells homes through its operating divisions across the United States under the name KB Home. It operates a homebuilding and financial services business serving homebuyers in markets nationwide.

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KB Home Earnings Cheat Sheet

Results: Loss narrowed to $24.1 million (loss of 31 cents per diluted share) from $68.5 million (loss of 89 cents per share) in the same quarter a year earlier.

Revenue: Rose 11.4% to $302.9 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: KB Home beat the mean analyst estimate of a loss of 36 cents per share. Analysts were expecting revenue of $301.3 million.

Quoting Management: “Our second quarter results reflect the continued repositioning of our operations and investments to stronger, highly desirable, land-constrained submarkets that support sales of larger, higher-priced homes to our core first-time and first move-up customers,” said Jeffrey Mezger, president and chief executive officer. “The impact of our strategic product and community placement can be seen in our improved financial and operating results in the quarter as we pursue our goal of returning to profitability. We generated a year-over-year increase in our average selling price for the eighth consecutive quarter, which drove a double-digit increase in our revenues and substantial improvement in our bottom line results. In addition, the value of our second quarter net orders grew by 18% from the prior year on only a modest increase in net orders. We expect the benefits of our repositioning efforts and the shifting of our geographic footprint to become more fully realized in future quarters.”"Entering the second half of 2012, we have a strong backlog of homes with higher selling prices and better margins to help restore profitability, and we anticipate achieving further gains in our margin performance as our revenue growth and cost-management efforts take hold,” continued Mezger. “In navigating through a mixed environment of an improving, but uneven recovery in housing markets and softening economic and employment trends, we will remain focused on executing our strategic initiatives, which we believe will generate both near-term improvement in our financial and operating results and longer-term growth and profitability.”

Key Stats:

Revenue has now gone up in each of the last three quarters. In the first quarter, revenue rose 29.3% to $254.6 million while the figure rose 6.4% in the fourth quarter of the last fiscal year from the year earlier.

The company topped expectations last quarter after falling short of forecasts in the first quarter with a loss of 51 cents versus a mean estimate of a loss of 23 cents per share.

Looking Forward: Analysts seem more negative about the company’s results for the next quarter than ninety days ago. The average estimate for the third quarter has moved from a loss of 7 cents a share to a loss of 9 cents over the last ninety days. The average estimate for the fiscal year has reached a loss of $1.04 per share, down from a loss of 79 cents ninety days ago.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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