KB Home's Sales Soar, but Profit Hurt by Land Costs, Impairments
September 24 2015 - 10:00AM
Dow Jones News
KB Home said profit fell in its latest quarter as higher land
costs and an impairment charge offset surging revenue.
Like its larger rival Lennar Corp., the Los Angeles-based
builder reported double-digit percentage gains in orders and
deliveries, although those increases fell short of analysts'
expectations. New orders, up 19%, increased across all geographic
regions. Deliveries jumped 24%, bolstered by strength in the West
and southwest.
KB's average selling price, meanwhile, increased 9% to $357,200.
Higher sales prices and stronger delivery volume pushed revenue up
43% from a year earlier.
However, a spike in land costs, to $40.3 million from $3.4
million last year, helped offset the revenue increase and led to a
steeper-than-expected drop in the builder's gross profit margin.
Margin fell to 16.2% from 18.8%; RBC Capital Markets analyst Robert
Wetenhall had projected a margin decline to 16.6%. Earlier this
week, Lennar similarly pointed to more expensive land for its
margin contraction.
In addition to higher land costs, $3.5 million in charges
stemming from housing inventory impairments and contract
abandonments bit into the bottom line.
Overall, the company reported a profit of $23.3 million, or 23
cents a share, down from $28.4 million, or 28 cents, a year
earlier. Revenue increased 43% to $843.2 million.
Analysts projected 22 cents in per-share earnings on $818.5
million in sales, according to Thomson Reuters.
Shares in the company, down about 14% this year and lagging its
peers, slipped 0.7% premarket.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
September 24, 2015 09:45 ET (13:45 GMT)
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