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SCVNews.com | Year-End Closeouts Chew Up KB Home’s Profit Margin | 12-21-2011
Santa Clarita CA
Today in
S.C.V. History
August 22
1891 - Future First Lady Lou Henry (Hoover), 17, poses for photo at R.E. Nickel's Acton store [story]

Los Angeles-area home builder KB Home delivered 4 percent more homes and beat Wall Street expectations in the fourth quarter of 2011 – but still saw its profits fall 20 percent to $13.9 million (18 cents per share), compared to $17.4 million (23 cents) a year earlier.

The company earned just $0.8 million from its home building operation during the quarter ending Nov. 30, compared to $29.1 million for the same period a year ago.

The company attributed the decrease to a lower gross margin on home sales. The profit margin tightened to 14.7 percent compares to 19.1 percent a year earlier, largely as a result of year-end closeouts in higher-margin communities.

With operations in about a dozen states, KB Home’s current new-home communities in the Santa Clarita Valley include Milan at West Hills in Valencia and Echo Pointe and Echo Ridge at Plum Canyon in Saugus.

For the full year, the company delivered 21 percent fewer homes (5,812) than in 2010 and posted a net loss of $178.8 million ($2.32 per share), despite 5-percent higher average selling prices ($224,600).

Net orders for the year ending Nov. 30 increased to 6,632 from 6,556 in 2010 – the first increase in full year net orders in two years, the company said.

CEO Jeffrey Mezger pointed to a 38 percent increase in net orders during the fourth quarter and a 2,156-home backlog, versus a backlog of 1,336 homes at the end of the prior fourth quarter.

“We believe we are moving into 2012 well-positioned to achieve further improvement in our financial metrics,” Mezger said in a statement. “We anticipate that our companywide average selling price will continue to grow in 2012 as we heighten our concentration in our most desirable markets, particularly in our West Coast region which typically generates higher profits.”

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