KB Home (NYSE: KBH) at market close Wednesday reported a net profit for its first quarter ended Feb. 29 of $13.1 million, or 14 cents a share, beating the consensus analyst estimate of a profit of 11 cents a share. Shares of KBH were trading up 6.8% at $14.00 in after-hours trading shortly before 5 p.m.

"We are off to a strong start to 2016," said Jeffrey Mezger, president and chief executive officer. "Solid execution on our key operating strategies drove measurable growth in revenues, operating margin and earnings. We ended the quarter with a healthy backlog and continued positive momentum in our core home building business, reinforcing our favorable outlook for the full year."

Statement of Operations (comparisons on a year-over-year basis)

  • Total revenues grew 17% to $678.4 million.
  • Housing revenues increased 28% to $672.6 million.
  • Deliveries rose 23% to 1,953 homes.
  • Average selling price increased 5% to $344,400.
  • Land sale revenues totaled $3.1 million, compared to $53.0 million.
  • Housing gross profit margin improved to 16.0%, net of approximately 20 basis points of inventory impairment and land option contract abandonment charges.
  • Adjusted housing gross profit margin, which excludes the amortization of previously capitalized interest and inventory-related charges, improved 120 basis points to 20.7%.
  • Selling, general and administrative expenses improved 40 basis points to 13.1% of housing revenues.
  • Home building operating income grew 32% to $19.0 million from $14.4 million. The current quarter included a land sale loss of $.9 million, compared to a $6.0 million land sale gain in the year-earlier quarter.
  • Home building operating income margin increased 30 basis points. Excluding land sale results, homebuilding operating income margin rose 140 basis points to 3.0%.
  • Income tax expense of $2.9 million was favorably impacted by $3.3 million of federal energy tax credits earned from building energy-efficient homes and represented an effective tax rate of 18.1%.
  • Net income grew 68% to $13.1 million.
  • Earnings per diluted share increased to $.14 from $.08.
  • Backlog and Net Orders (comparisons on a year-over-year basis)
  • Ending backlog value grew 29% to $1.43 billion.
  • Homes in backlog increased 22% to 4,285.
  • Net order value increased 9% to $824.7 million.
  • Net orders grew 4% to 2,272.
  • The cancellation rate as a percentage of beginning backlog improved to 21% from 25%.
  • Average community count increased 6% to 244, with ending community count totaling 241.
  • Balance Sheet (as of February 29, 2016)
  • Cash, cash equivalents and restricted cash totaled $327.4 million.
  • Inventories totaled $3.47 billion, and investments in land acquisition and development totaled $385.7 million for the quarter.
  • Lots owned or controlled totaled 48,211, of which 81% were owned.
  • There were no cash borrowings outstanding under the unsecured revolving credit facility.
  • Repurchased nearly 8.4 million shares of common stock during the quarter at a total cost of $85.9 million under the program authorized by the Company's board of directors in January 2016.
  • "Our strategic focus this year remains centered on driving profitable growth and enhancing stockholder value," said Mezger. "We are also committed to maintaining financial strength and flexibility, making focused capital allocation decisions to support our goals and invest in our operating platform, and managing our leverage. Consistent with this balanced approach, we repurchased more than eight million shares of our common stock during the quarter at a significant discount to book value," concluded Mezger.

    The full earnings release can be read here.