Los Angeles-area home builder KB Home cut its first-quarter net loss to $45.8 million (59 cents per share) from $114.5 million ($1.49) a year earlier because it didn’t have to record any extraordinary losses during the quarter ending Feb. 29, the way it did a year ago.
Net orders numbered just 1,197, down 8 percent from the year-ago quarter’s 1,302 – and investors responded unfavorably as share prices fell 8.45 percent Friday.
Losses attributed to home building were $31.1 million for the quarter ending Feb. 29, an improvement from $47.9 million a year earlier as overall revenues increased 29 percent to $254.6 million from $196.9 million for the period, reflecting higher deliveries and an increase in the average selling price.
But the profit margin tightened to 9.7 percent from 12.6 percent during the first quarter of 2011 as costs rose to $55.7 million from $49.6 million and interest expenses rose to $16.3 million (including a $2 million loss on the early extinguishment of debt) versus $11.4 million (with a $3.6 million gain on the early extinguishment of debt) one year earlier.
Pre-tax losses for the quarter fell to $45.4 million from $114.1 million, largely because of the hit the company took in the first quarter of 2011 when an investment went south. It recorded an impairment charge of $53.7 million and a loss on loan guaranty of $22.8 million in connection with the company’s Henderson, Nev., joint venture South Edge LLC, which filed for bankruptcy protection. It had no comparable loss in the first quarter of 2012.
“The pace of the recovery is uneven,” said CEO Jeffrey Mezger, “with certain local markets showing greater strength and more normalized activity than other areas where a rebound will take longer to manifest. We expect that the housing market in general will gradually strengthen as the economy continues to advance.”
Home orders rose 22 percent in the company’s central states region during the first quarter of 2012 but fell even more sharply elsewhere.
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.