KB Home (NYSE:KBH), Los Angeles, Friday morning reported a net loss of $58.1 million, or $0.75 per share, for the fiscal first quarter of 2009 ended Feb.28, beating analyst estimates of a loss of $0.81 cents per share.
The loss included impairments and write-downs of $32.3 million, well below the $223.9 million taken in the comparable quarter last year, as well as a $22.7 million FAS 109 charge to deferred tax assets, also down considerably from $100 million for last year's first quarter. Results also included a $221 million federal income tax refund.
KB reported that net orders for new homes rose 26% in the quarter to 1,827, and that its cancellation rate as a percentage of gross orders improved to 28% in the first quarter of 2009, down from 46% in the fourth quarter of2008 and 53% in the first quarter of 2008.
Still, KB president and CEO Jeffrey Mezger said in a statement that the company currently foresees "no meaningful improvement in market conditions for the remainder of this year." The market, he said, remains "severely challenged by inventory oversupply, declining home prices, tightening lending standards, rising unemployment and weakening consumer confidence."
Revenues were down 61% from last year's fiscal first quarter to $307.4 million, owing to a 58% year-over-year decline in housing revenues as closings declined 51% to 1,445 homes and the average selling price fell 15% year-over-year to $210,700, reflecting decreases of 21%, 19% and 24% in the company's West Coast, Southwest and Southeast regions and a 3% increase in the Central region.
The number of homes in backlog at quarter's end decreased 45% on a year-over-year basis to 2,651 homes, with backlog value down 55% to approximately $559.8 million. Compared to year-end 2008 levels, homes and future revenues in backlog increased 17% and 7%, respectively.
KB narrowed its loss from unconsolidated joint ventures to $9.7 million in the quarter, including impairment charges of $7.6 million, compared to $39.9 million in the first quarter of 2008, including $36.4 million of impairment charges.
SG&A expenses decreased to $61.2 million, a 52% reduction primarily attributable to cost cutting, including exiting underperforming markets, consolidating operating divisions and reducing workforce. SG&A as a percentage of housing revenues, however, increased to 20.1% from 17.6% in the same period of 2008 due to the decline in housing revenues.
The company's financial services operations, which include its unconsolidated mortgage banking joint venture, generated pretax income of $1.7 million, down from $7.9 million in the year-earlier quarter, due to a 56% decline in mortgages originated by the joint venture and lower prices.
The company ended the first quarter of 2009 with $1.13 billion of cash and cash equivalents, including $111.2 million of restricted cash. Its debt balance at February 28, 2009 was $1.74 billion, down $203.6 million from $1.94 billion at November 30, 2008, mainly due to the maturity of $200.0 million of 8 5/8% senior subordinated notes on December 15, 2008. KB had no cash borrowings outstanding on its revolving credit facility at the end of the first quarter of 2009, and the ratio of debt to total capital was 69.4% at February 28, 2009, compared to 70.0% at November 30, 2008 and 58.0% at February 29, 2008.
Shares of KB were up more than 4% at $14.76 in mid-afternoon trading on the NYSE as all but two of its public builder peers were suffering a down day.