KB Home (KBH) Falls in line with the Poor Housing Market
KB Home (NYSE:KBH - News), one of America's largest homebuilders, today reported financial results for its third quarter ended August 31, 2007. Highlights include:
The Company completed the previously reported sale of its entire 49% equity interest in its French subsidiary, Kaufman & Broad SA. The sale generated total gross proceeds of $807.2 million and an after-tax gain of $438.1 million. The French operations are presented as discontinued operations in the Company's current financial statements and results from prior periods have been reclassified to conform to this presentation.
Revenues totaled $1.54 billion for the quarter ended August 31, 2007, down 32% from $2.28 billion for the third quarter of 2006 due to lower housing revenues. Third quarter housing revenues of $1.53 billion were 33% lower than the year-earlier period, reflecting a 28% decrease in unit deliveries to 5,699 from 7,893 and a 7% decrease in the average selling price to $267,700 from $288,000.
For the three months ended August 31, 2007, the Company reported a loss from continuing operations, net of an income tax benefit, of $478.6 million or $6.19 per diluted share due largely to pretax non-cash charges of $690.1 million related to inventory and joint venture impairments and the abandonment of land option contracts, and $107.9 million related to goodwill impairment. In the third quarter of 2006, the Company's continuing operations generated after-tax income of $129.3 million or $1.60 per diluted share. The French discontinued operations contributed third quarter after-tax income of $443.0 million or $5.73 per diluted share in 2007, including the gain realized on the sale of the operations, compared to $23.9 million or $.30 per diluted share in the third quarter of 2006. Overall, the Company posted a net loss in the 2007 third quarter (including the French discontinued operations) of $35.6 million or $.46 per diluted share, compared to net income of $153.2 million or $1.90 per diluted share in the year-earlier period.
As previously announced, the Company redeemed $650 million of debt during the third quarter, significantly strengthening its financial position. The redemption consisted of all $250 million of the Company's 9 1/2% Senior Subordinated Notes due in 2011 and an unsecured $400 million term loan scheduled to mature on April 11, 2011. The early extinguishment of the notes and loan resulted in a charge of $13.0 million in the third quarter. At August 31, 2007, the Company had $646 million in cash and a debt to total capital ratio of 45% (36% net of cash), a significant improvement from debt to total capital of 54% (53% net of cash) at August 31, 2006.
Backlog at August 31, 2007 totaled 11,880 units, representing potential future housing revenues of $3.07 billion. These levels were down 31% and 38%, respectively, from the 17,198 backlog units and $4.95 billion backlog value at August 31, 2006. The lower backlog unit and value levels in the current quarter reflected negative year-over-year net order comparisons for the past several quarters and lower average selling prices. Company-wide net orders for the third quarter of 2007 totaled 3,907, down 6% from 4,167 in the year-earlier quarter.
The Company completed the previously reported sale of its entire 49% equity interest in its French subsidiary, Kaufman & Broad SA. The sale generated total gross proceeds of $807.2 million and an after-tax gain of $438.1 million. The French operations are presented as discontinued operations in the Company's current financial statements and results from prior periods have been reclassified to conform to this presentation.
Revenues totaled $1.54 billion for the quarter ended August 31, 2007, down 32% from $2.28 billion for the third quarter of 2006 due to lower housing revenues. Third quarter housing revenues of $1.53 billion were 33% lower than the year-earlier period, reflecting a 28% decrease in unit deliveries to 5,699 from 7,893 and a 7% decrease in the average selling price to $267,700 from $288,000.
For the three months ended August 31, 2007, the Company reported a loss from continuing operations, net of an income tax benefit, of $478.6 million or $6.19 per diluted share due largely to pretax non-cash charges of $690.1 million related to inventory and joint venture impairments and the abandonment of land option contracts, and $107.9 million related to goodwill impairment. In the third quarter of 2006, the Company's continuing operations generated after-tax income of $129.3 million or $1.60 per diluted share. The French discontinued operations contributed third quarter after-tax income of $443.0 million or $5.73 per diluted share in 2007, including the gain realized on the sale of the operations, compared to $23.9 million or $.30 per diluted share in the third quarter of 2006. Overall, the Company posted a net loss in the 2007 third quarter (including the French discontinued operations) of $35.6 million or $.46 per diluted share, compared to net income of $153.2 million or $1.90 per diluted share in the year-earlier period.
As previously announced, the Company redeemed $650 million of debt during the third quarter, significantly strengthening its financial position. The redemption consisted of all $250 million of the Company's 9 1/2% Senior Subordinated Notes due in 2011 and an unsecured $400 million term loan scheduled to mature on April 11, 2011. The early extinguishment of the notes and loan resulted in a charge of $13.0 million in the third quarter. At August 31, 2007, the Company had $646 million in cash and a debt to total capital ratio of 45% (36% net of cash), a significant improvement from debt to total capital of 54% (53% net of cash) at August 31, 2006.
Backlog at August 31, 2007 totaled 11,880 units, representing potential future housing revenues of $3.07 billion. These levels were down 31% and 38%, respectively, from the 17,198 backlog units and $4.95 billion backlog value at August 31, 2006. The lower backlog unit and value levels in the current quarter reflected negative year-over-year net order comparisons for the past several quarters and lower average selling prices. Company-wide net orders for the third quarter of 2007 totaled 3,907, down 6% from 4,167 in the year-earlier quarter.
posted by Stock Administrator @ 10:40 AM
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