KB Home Reports Second Quarter 2009 Financial Results
LOS ANGELES, Jun 26, 2009 (BUSINESS WIRE) -- KB Home (NYSE: KBH), one of America's largest homebuilders, today
reported financial results for its second quarter ended May 31, 2009.
Results include:
-
Revenues totaled $384.5 million in the second quarter of 2009, down
40% from $639.1 million in the year-earlier quarter. The decline was
due to lower housing revenues of $380.8 million in the second quarter
of 2009, compared to $636.7 million in the year-earlier quarter,
reflecting a 37% decrease in homes delivered and a 5% decline in the
average selling price. The Company delivered 1,761 homes at an average
selling price of $216,200 in the second quarter of 2009, compared to
2,810 homes delivered in the year-earlier quarter at an average
selling price of $226,600.
-
The Company reported a net loss of $78.4 million, or $1.03 per diluted
share, for the quarter ended May 31, 2009, compared to a net loss of
$255.9 million, or $3.30 per diluted share, for the year-earlier
period. The current quarter net loss included pretax, noncash charges
for inventory and joint venture impairments and the abandonment of
land option contracts totaling $49.5 million, a 72% reduction from the
$176.5 million of similar charges in the second quarter of 2008. The
net loss for the year-earlier quarter also included a $24.6 million
goodwill impairment charge.
-
The Company ended its 2009 second quarter with a cash balance of $1.10
billion, including $102.2 million of restricted cash, and no
borrowings outstanding on its revolving credit facility. As of May 31,
2009, the Company's debt balance totaled $1.71 billion. The Company's
ratio of debt to total capital was 71.5% at May 31, 2009, compared to
70.0% at November 30, 2008 and 62.9% at May 31, 2008. Net of cash, the
Company's ratio of debt to total capital was 47.3% at May 31, 2009,
45.4% at November 30, 2008 and 40.2% at May 31, 2008.
-
The Company's backlog at May 31, 2009 totaled 3,804 homes,
representing potential future housing revenues of approximately $796.9
million, compared to a backlog of 6,233 homes representing potential
future housing revenues of approximately $1.47 billion at May 31,
2008. Company-wide net orders for new homes in the second quarter were
2,910, down 31% from 4,200 in the second quarter of 2008 but up 59%
from 1,827 net orders in the first quarter of 2009. The Company's
cancellation rate based on gross orders improved to 20% in the current
quarter, compared to 28% in the first quarter of 2009 and 27% in the
second quarter of 2008.
-
In May 2009, the Company released its second annual Sustainability
Report, which highlights, among other things, its accomplishments and
ongoing efforts to improve the energy efficiency of its homes and
reduce the environmental impact of its operations. These include the
Company's commitment to build exclusively ENERGY STAR(R) qualified
homes in all communities newly opened in 2009 and beyond; its launch
of a new generation of affordable, energy-efficient homes called The
Open Series(TM); and its implementation of waste- and cost-reduction
practices in its operations companywide.
"As with many other industries and companies, prevailing recessionary
economic conditions weighed heavily on the homebuilding industry and on
our operations during the second quarter," said Jeffrey Mezger,
president and chief executive officer. "Despite the turbulent economy,
however, we narrowed our loss for the quarter compared to a year ago
through the continued execution of strategic initiatives designed to
improve our gross margins, reduce our overhead costs and restore our
operations to profitability."
"Looking forward, although key economic indicators remain mixed, we are
beginning to see signs that some negative housing market trends may be
moderating at both the local and national levels," continued Mezger.
"Ongoing foreclosure activity, which has increased housing supply and
exerted downward pressure on home prices in a number of markets, is also
leading housing affordability to record levels. Job market weakness and
tight mortgage lending standards continue to restrain demand, yet
consumer confidence appears to be growing. While these conflicting
market signals make it premature to declare that housing has reached the
end of its severe, multi-year correction, they may indicate we are
approaching a point of relative stability, especially if the overall
economy rebounds and mortgage interest rates remain low."
"Given the uncertainty of when and to what extent general economic and
housing market conditions may improve, we continue to conservatively
manage our business," said Mezger. "We remain focused on generating
positive cash flows, increasing our operating efficiencies and margins,
and calibrating our products and marketing efforts to best capitalize on
the pent-up demand for new homes that we believe will become evident
when markets begin a sustained recovery."
The Company's total revenues of $384.5 million in the quarter ended May
31, 2009 decreased 40% from $639.1 million in the year-earlier quarter,
reflecting lower housing revenues. Housing revenues totaled $380.8
million in the second quarter of 2009, down 40% from $636.7 million in
the year-earlier quarter, due to a 37% decrease in homes delivered to
1,761 from 2,810 and a 5% decline in the average selling price to
$216,200 from $226,600. Each of the Company's homebuilding regions
experienced year-over-year decreases in both homes delivered and average
selling prices during the second quarter. The number of homes delivered
decreased 6% in the Company's West Coast region, 55% in the Southwest
region, 39% in the Central region and 47% in the Southeast region, while
the average selling price declined 4% in the West Coast region, 23% in
the Southwest region, 8% in the Central region and 15% in the Southeast
region.
The Company's homebuilding business generated an operating loss of $66.5
million in the second quarter of 2009, largely due to pretax, noncash
charges of $42.3 million for inventory impairments and the abandonment
of land option contracts the Company no longer plans to pursue. In the
year-earlier quarter, the Company's housing operations produced an
operating loss of $262.4 million, including pretax, noncash charges of
$174.4 million for inventory impairments and land option contract
abandonments and $24.6 million for goodwill impairment. The Company's
housing gross margin improved to 1.9% in the second quarter of 2009,
compared to a negative 17.5% in the second quarter of 2008. Excluding
inventory impairment and abandonment charges of $41.0 million in the
second quarter of 2009 and $167.1 million in the second quarter of 2008,
the housing gross margins in the respective periods would have been
12.7% and 8.7%. Land sales in the second quarter of 2009 generated a
loss of $1.2 million, including $1.3 million of impairment charges
related to planned future land sales, compared to a loss of $7.4 million
in the second quarter of 2008, which included $7.3 million of similar
impairment charges. The Company's ongoing actions to lower its overhead
costs resulted in selling, general and administrative expenses
decreasing by $46.5 million, or 39%, to $72.6 million in the second
quarter of 2009, down from $119.1 million in the year-earlier period. As
a percent of housing revenues, selling, general and administrative
expenses were 19.1% in the second quarter of 2009, compared to 20.1% in
the first quarter of 2009 and 18.7% in the second quarter of 2008.
The Company's equity in loss of unconsolidated joint ventures was $11.8
million in the second quarter of 2009, including $7.2 million of
impairment charges. The equity in loss of unconsolidated joint ventures
was $5.5 million in the second quarter of 2008, including $2.1 million
of impairment charges.
The Company's financial services operations, which include its equity
interest in an unconsolidated mortgage banking joint venture, generated
pretax income of $4.4 million in the second quarter of 2009, up 45% from
$3.0 million in the year-earlier quarter. The increase primarily
reflected higher margins within the joint venture, driven by the
origination and sale of more government-insured loans, and expense
reductions.
With stronger performances in both its homebuilding and financial
services operations, the Company narrowed its total pretax loss to $83.6
million in the second quarter of 2009, compared to $255.3 million in the
year-earlier quarter. The Company reported a net loss of $78.4 million,
or $1.03 per diluted share, for the 2009 second quarter, including a
$31.7 million charge to record an after-tax valuation allowance against
the net deferred tax assets resulting from its current quarter loss. In
the second quarter of 2008, the Company reported a net loss of $255.9
million, or $3.30 per diluted share, including a charge of $98.9 million
to record an after-tax valuation allowance against the net deferred tax
assets generated from that quarter's loss.
Net new home orders totaled 2,910 in the second quarter of 2009,
decreasing 31% from 4,200 net orders in the year-earlier period. The
Company's cancellation rate as a percentage of gross orders improved to
20% in the current quarter from 28% in the first quarter of 2009 and 27%
in the second quarter of 2008. As a percentage of beginning backlog, the
cancellation rate also improved to 27% in the current quarter from 31%
in the first quarter of 2009 and 33% in the second quarter of 2008. The
number of homes in backlog at May 31, 2009 decreased 39% on a
year-over-year basis to 3,804, while the corresponding backlog value
declined 46% to approximately $796.9 million.
Company-wide revenues for the six months ended May 31, 2009 totaled
$691.8 million, down 52% from $1.43 billion for the six months ended May
31, 2008. Homes delivered in the first six months of fiscal 2009
declined 44% year-over-year to 3,206, and the average selling price
decreased 10% year-over-year to $213,700. The Company generated a net
loss of $136.5 million, or $1.78 per diluted share, in the first half of
fiscal 2009, including pretax, noncash charges of $81.8 million for
inventory and joint venture impairments and land option contract
abandonments. The net loss also reflected an after-tax charge of $54.4
million to record a valuation allowance against the net deferred tax
assets generated during the current period. For the first half of fiscal
2008, the Company posted a net loss of $524.1 million, or $6.77 per
diluted share, including pretax, noncash charges of $400.5 million for
inventory and joint venture impairments and land option contract
abandonments, and $24.6 million for goodwill impairment. The net loss
for the first half of fiscal 2008 also reflected a $198.9 million
after-tax valuation charge against the net deferred tax assets generated
during the period.
The Conference Call on the Second Quarter 2009 earnings will be
broadcast live TODAY at 8:30 a.m. Pacific Daylight Time, 11:30 a.m.
Eastern Daylight Time. To listen, please go to the Investor Relations
section of the Company's website at kbhome.com. KB Home, one of the nation's leading homebuilders, has delivered
hundreds of thousands of quality homes for families since its founding
in 1957. The Company is distinguished by its Built to Order(TM)
homebuilding approach that puts a custom home experience within reach of
its customers at an affordable price. KB Home's award-winning homes and
communities meet the needs of first-time homebuyers with flexible
designs that also appeal to move-up buyers and active adults. Los
Angeles-based KB Home was named the #1 homebuilder on FORTUNE(R)
magazine's 2009 "World's Most Admired Companies" list. This marks the
second year in a row and the third time in the past four years that KB
Home has achieved the top ranking. The Company trades under the ticker
symbol "KBH," and was the first homebuilder listed on the New York Stock
Exchange. For more information about any of KB Home's new home
communities call 888-KB-HOMES or visit www.kbhome.com.
Certain matters discussed in this press release, including any
statements that are predictive in nature or concern future market and
economic conditions, business and prospects, our future financial and
operational performance, or our future actions and their expected
results are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements are based on current expectations and projections about
future events and are not guarantees of future performance. We do not
have a specific policy or intent of updating or revising forward-looking
statements. Actual events and results may differ materially from those
expressed or forecasted in forward-looking statements due to a number of
factors. The most important risk factors that could cause our actual
performance and future events and actions to differ materially from such
forward-looking statements include, but are not limited to: general
economic and business conditions; adverse market conditions that could
result in additional asset impairments or abandonment charges and
operating losses, including an oversupply of unsold homes and declining
home prices, among other things; conditions in the capital and credit
markets (including consumer mortgage lending standards, the availability
of consumer mortgage financing and mortgage foreclosure rates) material
prices and availability; labor costs and availability; changes in
interest rates; inflation; our debt level; declines in consumer
confidence; increases in competition; weather conditions, significant
natural disasters and other environmental factors; government actions
and regulations directed at or affecting the housing market, the
homebuilding industry, or construction activities; the availability and
cost of land in desirable areas; legal or regulatory proceedings or
claims; the ability and/or willingness of participants in our
unconsolidated joint ventures to fulfill their obligations; our ability
to access capital, including our capacity under our unsecured revolving
credit facility; our ability to use the net deferred tax assets we have
generated; our ability to successfully implement our current and planned
product, geographic and market positioning and cost reduction
strategies; consumer interest in our new product designs and other
events outside of our control. Please see our periodic reports and other
filings with the Securities and Exchange Commission for a further
discussion of these and other risks and uncertainties applicable to our
business.
(Tables Follow) | | | | | | | | | | | | KB HOME | | CONSOLIDATED STATEMENTS OF OPERATIONS |
For the Six Months and Three Months Ended May 31, 2009 and 2008
|
(In Thousands, Except Per Share Amounts - Unaudited)
| | | | | | | | | | | | | |
Six Months
| |
Three Months
| | | |
2009
| | | | |
2008
| | | |
2009
| | | | |
2008
| | | | | | | | | | | | | | Total revenues | |
$
|
691,831
| | | |
$
|
1,433,289
| | |
$
|
384,470
| | | |
$
|
639,065
| | | | | | | | | | | | | | | | | | | | | | | | | Homebuilding: | | | | | | | | | | | |
Revenues
| |
$
|
688,666
| | | |
$
|
1,428,402
| | |
$
|
382,925
| | | |
$
|
637,094
| | |
Costs and expenses
| | |
(801,537
|
)
| | | |
(1,939,754
|
)
| | |
(449,404
|
)
| | | |
(899,475
|
)
| | | | | | | | | | | | |
Operating loss
| | |
(112,871
|
)
| | | |
(511,352
|
)
| | |
(66,479
|
)
| | | |
(262,381
|
)
| | | | | | | | | | | | |
Interest income
| | |
5,279
| | | | |
22,554
| | | |
1,766
| | | | |
9,522
| | |
Interest expense, net of amounts capitalized
| | |
(20,123
|
)
| | | |
-
| | | |
(11,471
|
)
| | | |
-
| | |
Equity in loss of unconsolidated joint ventures
| | |
(21,496
|
)
| | | |
(45,361
|
)
| | |
(11,754
|
)
| | | |
(5,483
|
)
| | | | | | | | | | | | |
Homebuilding pretax loss
| | |
(149,211
|
)
| | | |
(534,159
|
)
| | |
(87,938
|
)
| | | |
(258,342
|
)
| | | | | | | | | | | | | Financial services: | | | | | | | | | | | |
Revenues
| | |
3,165
| | | | |
4,887
| | | |
1,545
| | | | |
1,971
| | |
Expenses
| | |
(1,654
|
)
| | | |
(2,232
|
)
| | |
(794
|
)
| | | |
(1,113
|
)
| |
Equity in income of unconsolidated joint venture
| | |
4,545
| | | | |
8,302
| | | |
3,604
| | | | |
2,154
| | | | | | | | | | | | | |
Financial services pretax income
| | |
6,056
| | | | |
10,957
| | | |
4,355
| | | | |
3,012
| | | | | | | | | | | | | | Total pretax loss | | |
(143,155
|
)
| | | |
(523,202
|
)
| | |
(83,583
|
)
| | | |
(255,330
|
)
| |
Income tax benefit (expense)
| | |
6,700
| | | | |
(900
|
)
| | |
5,200
| | | | |
(600
|
)
| | | | | | | | | | | | | Net loss | |
$
|
(136,455
|
)
| | |
$
|
(524,102
|
)
| |
$
|
(78,383
|
)
| | |
$
|
(255,930
|
)
| | | | | | | | | | | | | Basic and diluted loss per share | |
$
|
(1.78
|
)
| | |
$
|
(6.77
|
)
| |
$
|
(1.03
|
)
| | |
$
|
(3.30
|
)
| | | | | | | | | | | | | Basic and diluted average shares outstanding | | |
76,822
| | | | |
77,413
| | | |
76,281
| | | | |
77,462
| | | | | | | | | | | | |
| | | | | | KB HOME | | CONSOLIDATED BALANCE SHEETS |
(In Thousands - Unaudited)
| | | | | | | |
May 31,
| |
November 30,
| | |
2009
| |
2008
| | | | | | | Assets | | | | | | | | | | | Homebuilding: | | | | | |
Cash and cash equivalents
| |
$
|
997,357
| |
$
|
1,135,399
| |
Restricted cash
| | |
102,160
| | |
115,404
| |
Receivables
| | |
144,542
| | |
357,719
| |
Inventories
| | |
1,893,963
| | |
2,106,716
| |
Investments in unconsolidated joint ventures
| | |
171,181
| | |
177,649
| |
Other assets
| | |
98,761
| | |
99,261
| | | |
3,407,964
| | |
3,992,148
| | | | | | |
Financial services
| | |
21,930
| | |
52,152
| | | | | | | Total assets | |
$
|
3,429,894
| |
$
|
4,044,300
| | | | | | | | | | | | Liabilities and stockholders' equity | | | | | | | | | | | Homebuilding: | | | | | |
Accounts payable
| |
$
|
454,027
| |
$
|
541,294
| |
Accrued expenses and other liabilities
| | |
571,015
| | |
721,397
| |
Mortgages and notes payable
| | |
1,711,726
| | |
1,941,537
| | | |
2,736,768
| | |
3,204,228
| | | | | | |
Financial services
| | |
10,029
| | |
9,467
| | | | | | |
Stockholders' equity
| | |
683,097
| | |
830,605
| | | | | | | Total liabilities and stockholders' equity | |
$
|
3,429,894
| |
$
|
4,044,300
| | | | | | | |
| | | | | | | | | | | | KB HOME | | SUPPLEMENTAL INFORMATION |
For the Six Months and Three Months Ended May 31, 2009 and 2008
|
(In Thousands - Unaudited)
| | | | | | | | | | | | | |
Six Months
| |
Three Months
| | Homebuilding revenues: | | |
2009
| | | | |
2008
| | | |
2009
| | | | |
2008
| | | | | | | | | | | | | |
Housing
| |
$
|
685,260
| | | |
$
|
1,363,433
| | |
$
|
380,806
| | | |
$
|
636,719
| | |
Land
| | |
3,406
| | | | |
64,969
| | | |
2,119
| | | | |
375
| | | | | | | | | | | | | |
Total
| |
$
|
688,666
| | | |
$
|
1,428,402
| | |
$
|
382,925
| | | |
$
|
637,094
| | | | | | | | | | | | | | | | | | | | | | | | | |
Six Months
| |
Three Months
| | Costs and expenses: | | |
2009
| | | | |
2008
| | | |
2009
| | | | |
2008
| | | | | | | | | | | | | |
Construction and land costs
| | | | | | | | | | | |
Housing
| |
$
|
662,876
| | | |
$
|
1,520,091
| | |
$
|
373,453
| | | |
$
|
748,098
| | |
Land
| | |
4,892
| | | | |
148,390
| | | |
3,357
| | | | |
7,742
| | |
Subtotal
| | |
667,768
| | | | |
1,668,481
| | | |
376,810
| | | | |
755,840
| | |
Selling, general and administrative expenses
| | |
133,769
| | | | |
246,703
| | | |
72,594
| | | | |
119,065
| | |
Goodwill impairment
| | |
-
| | | | |
24,570
| | | |
-
| | | | |
24,570
| | | | | | | | | | | | | |
Total
| |
$
|
801,537
| | | |
$
|
1,939,754
| | |
$
|
449,404
| | | |
$
|
899,475
| | | | | | | | | | | | | | | | | | | | | | | | | |
Six Months
| |
Three Months
| | Interest expense: | | |
2009
| | | | |
2008
| | | |
2009
| | | | |
2008
| | | | | | | | | | | | | |
Interest incurred
| |
$
|
57,277
| | | |
$
|
76,905
| | |
$
|
28,019
| | | |
$
|
38,403
| | |
Interest capitalized
| | |
(37,154
|
)
| | | |
(76,905
|
)
| | |
(16,548
|
)
| | | |
(38,403
|
)
| | | | | | | | | | | | |
Total
| |
$
|
20,123
| | | |
$
|
-
| | |
$
|
11,471
| | | |
$
|
-
| | | | | | | | | | | | | | | | | | | | | | | | | |
Six Months
| |
Three Months
| | Other information: | | |
2009
| | | | |
2008
| | | |
2009
| | | | |
2008
| | | | | | | | | | | | | |
Depreciation and amortization
| |
$
|
3,602
| | | |
$
|
6,341
| | |
$
|
1,776
| | | |
$
|
2,958
| | |
Amortization of previously capitalized interest
| | |
43,372
| | | | |
54,898
| | | |
26,480
| | | | |
26,322
| | | | | | | | | | | | |
| | | | | | | | | | | | KB HOME | | SUPPLEMENTAL INFORMATION |
For the Six Months and Three Months Ended May 31, 2009 and 2008
|
(Unaudited)
| | | | | | | | | | | | | |
Six Months
| |
Three Months
| | Average sales price: | | |
2009
| | | |
2008
| | |
2009
| | | |
2008
| | | | | | | | | | | | |
West Coast
| |
$
|
315,400
| | |
$
|
362,300
| |
$
|
319,300
| | |
$
|
331,400
| |
Southwest
| | |
186,500
| | | |
236,700
| | |
176,200
| | | |
229,100
| |
Central
| | |
164,900
| | | |
170,000
| | |
157,500
| | | |
171,800
| |
Southeast
| | |
173,800
| | | |
216,400
| | |
173,700
| | | |
205,300
| | | | | | | | | | | | |
Total
| |
$
|
213,700
| | |
$
|
237,600
| |
$
|
216,200
| | |
$
|
226,600
| | | | | | | | | | | | | | | | | | | | | | | | |
Six Months
| |
Three Months
| | Homes delivered: | | |
2009
| | | |
2008
| | |
2009
| | | |
2008
| | | | | | | | | | | | |
West Coast
| | |
920
| | | |
1,217
| | |
569
| | | |
603
| |
Southwest
| | |
508
| | | |
1,274
| | |
241
| | | |
534
| |
Central
| | |
972
| | | |
1,762
| | |
525
| | | |
863
| |
Southeast
| | |
806
| | | |
1,485
| | |
426
| | | |
810
| | | | | | | | | | | | |
Total
| | |
3,206
| | | |
5,738
| | |
1,761
| | | |
2,810
| | | | | | | | | | | | |
Unconsolidated joint ventures
| | |
78
| | | |
149
| | |
55
| | | |
74
| | | | | | | | | | | | | | | | | | | | | | | | |
Six Months
| |
Three Months
| | Net orders: | | |
2009
| | | |
2008
| | |
2009
| | | |
2008
| | | | | | | | | | | | |
West Coast
| | |
1,387
| | | |
1,516
| | |
928
| | | |
977
| |
Southwest
| | |
581
| | | |
946
| | |
359
| | | |
760
| |
Central
| | |
1,670
| | | |
1,195
| | |
1,048
| | | |
964
| |
Southeast
| | |
1,099
| | | |
1,992
| | |
575
| | | |
1,499
| | | | | | | | | | | | |
Total
| | |
4,737
| | | |
5,649
| | |
2,910
| | | |
4,200
| | | | | | | | | | | | |
Unconsolidated joint ventures
| | |
73
| | | |
179
| | |
45
| | | |
131
| | | | | | | | | | | | | | | | | | | | | | | | |
May 31, 2009
| |
May 31, 2008
| | Backlog data: | |
Backlog Homes
| | |
Backlog Value
| |
Backlog Homes
| | |
Backlog Value
| |
(Dollars in thousands)
| | | | | | | | | | | |
West Coast
| | |
1,048
| | |
$
|
334,600
| | |
1,489
| | |
$
|
516,073
| |
Southwest
| | |
421
| | | |
72,429
| | |
978
| | | |
222,279
| |
Central
| | |
1,419
| | | |
228,723
| | |
1,444
| | | |
260,404
| |
Southeast
| | |
916
| | | |
161,104
| | |
2,322
| | | |
467,141
| | | | | | | | | | | | |
Total
| | |
3,804
| | |
$
|
796,856
| | |
6,233
| | |
$
|
1,465,897
| | | | | | | | | | | | |
Unconsolidated joint ventures
| | |
62
| | |
$
|
24,118
| | |
239
| | |
$
|
101,748
|
SOURCE: KB Home
KB Home
Kelly Masuda, Investor Relations
310-893-7434 or kmasuda@kbhome.com
Heather Reeves, Media Contact
310-231-4142 or hreeves-x@kbhome.com
Copyright Business Wire 2009
|
|