Home builder KB Home (KBH) Friday reported narrower loss for the first quarter of fiscal 2009, reflecting a significant year-over-year reduction in impairment charges. Quarterly revenues were down 61%, mainly on lower housing revenues due to reductions in homes delivered and the average selling price. The company currently expects no meaningful improvement in market conditions for the rest of the year.
For the quarter, the company's net loss was $58.07 million, or $0.75 per share, compared with a net loss of $268.17 million, or $3.47 per share, last year. The company said the favorable impact of its execution on strategic initiatives, combined with lower impairment charges, contributed to the significant reduction in net loss from a year ago.
On average, analysts polled by Thomson Reuters expected the company to report a loss of $0.81 per share for the first quarter. Analysts' estimates typically exclude one-time items.
The current-quarter net loss included pretax, non-cash charges for inventory and joint venture impairments and land option contract abandonments of $32.3 million, down 86% from $223.9 million of similar pretax, non-cash charges included in the year-ago quarter results.
The homebuilder's quarterly revenues plunged to $307.36 million from $794.22 million in the year-earlier quarter, primarily due to lower housing revenues. Analysts were looking for revenues of $347.51 million.
First-quarter housing revenues reached $304.5 million, a 58% fall from $726.7 million in the first quarter of 2008, reflecting a 51% decrease in homes delivered and a 15% decrease in the average selling price.
KB Home said it delivered 1,445 homes at an average selling price of $210,700 in the first quarter, compared with 2,928 homes at an average selling price of $248,200 a year ago.
Company-wide net orders for new homes increased 26% to 1,827 from 1,449 in the same quarter of 2008. The cancellation rate based on gross orders was 28%, compared with 53% in the first quarter of 2008.
Commenting on the results, Jeffrey Mezger, president and chief executive officer, 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.
KB Home's financial services operations, which include its unconsolidated mortgage banking joint venture, generated pre-tax income of $1.7 million in the first quarter, down from $7.9 million in the year-earlier quarter. The decrease was mainly due to a 56% decline in mortgages originated by the joint venture, reflecting the company's reduced home deliveries, and a 12% decline in average loan size due to the generally lower average selling prices of the company's homes.
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 said.
KBH closed Thursday's trading at $14.16, up $0.78, on a volume of 7.08 million shares. In pre-market trading, the company's shares rose 5.16%, or $0.73, to $14.89.
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