KB Home Tops Earnings and Revenue Projections
KB Home (NYSE:KBH) released its first-quarter results on March 26 after the closing bell. Both earnings and revenue topped analysts' expectations.
Earnings highlights
The homebuilder posted earnings of 63 cents per share in its first quarter of fiscal 2020, up from 31 cents reported in the prior-year quarter. Revenue of $1.08 billion jumped 33% on a year-over-year basis. Analysts had predicted earnings of 31 cents per share on $957.7 million in revenue.
Chairman and CEO Jeffrey Mezger commented the following on the company's performance:
"While our performance in the first quarter was strong, with underlying market conditions that were robust, these results preceded the COVID-19 pandemic declaration, and we are now taking actions to adjust our business in this period of uncertainty."
Housing details
The company built 2,752 homes during the quarter, which reflected a gain of 28% from the prior-year quarter. The average selling price was up 5% to $389,500.
Net orders went up 31% to 3,495 homes for a total appreciation in value of 35% to $1.38 billion. The backlog stood at 5,821 homes, up 26% year-over-year. Potential housing revenue arising from backlog amounted to $2.12 billion, up 28%.
Housing gross profit margin jumped 30 basis points to 17.4%, highlighting the positive impact of lower amortization of previously capitalized interest. The rise in gross margin also reflected improved operating leverage courtesy of higher housing revenue.
During the quarter, the average community count increased 3% to 251.
The CEO was full of praise of the company's robust balance sheet position as well as a strong liquidity to the tune of $1.2 billion:
"With our Built-to-Order model, we are flexible in aligning our business to demand and building to our sales pace, mitigating inventory risk. With that foundation, we are diligently managing our operations with a focus on being both prudent and strategic with our cash resources. While we continue to close homes and generate revenues, we are also taking steps to curtail land acquisition and development until circumstances become more stabilized. We have a long-tenured, hands-on team that is experienced in navigating changing market conditions, which will help guide our actions in this challenging environment."
Guidance
The company did not provide any guidance figure, citing the global uncertainty caused by the Covid-19 pandemic as the reason.
Disclosure: I do not hold any positions in the stocks mentioned.
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This article first appeared on GuruFocus.
