KB Home (NYSE:KBH) on Friday morning reported a net loss of $307.3 million, or $3.96 per diluted share, for its fiscal fourth quarter ended November 30, 2008, better than the $772 million loss posted in last year's fourth quarter but well below analysts estimates of a loss of $1.19-$1.23 per share. Much of that miss was due to charges of $265.9 million for inventory and joint venture impairments and land option contract abandonments, $43.4 million to write off all remaining goodwill, and an after-tax charge of $98.9 million to record a valuation allowance against the net deferred tax assets generated from the fourth-quarter loss.
For the fiscal year, the loss was $976.1 million, or $12.59 per diluted share, down from a loss of $1.41 billion, or $18.33 per diluted share, in2007 as revenues dropped to $3.03 billion from $6.42 billion.
KB's home building operations posted an operating loss of $241.5 million as its fourth-quarter housing gross margin, including charges, declined to a negative 8.6% from a negative 4.3% last year. Revenues fell 56% from last year's fourth quarter to $919.0 million this year; housing revenues dropped 55% year-over-year to $908.5 million. Homes delivered plunged 52% to 3,912 from 8,132, and the average selling price fell 6% to $232,200, a decrease of 6% from the fourth quarter of 2007.
Net new orders for the quarter fell 50% to 1,296 homes, compared to last year, an improvement from the 66% drop posted in the third quarter of 2008.The cancellation rate based on gross orders was 46% in the fourth quarter of 2008, compared to 51% in the third quarter of 2008 and 58% in the fourth quarter of 2007.
The number of homes in backlog at November 30, 2008 declined 64% from a year ago to 2,269, with decreases ranging from 51% to 73% across KB's four geographic operating regions. Total backlog value of approximately $521.4 million at November 30, 2008 fell 65% from approximately $1.50 billion at November 30, 2007.
Selling, general and administrative expenses totaled $121.1 million, down$107.6 million, or 47%, from $228.7 million in the fourth quarter of 2007.SG&A represented 13.3% of housing revenues in the fourth quarter, down from 19.9% in the third quarter but up from 11.3% in last year's fourth quarter.
KB generated positive operating cash flow of $311.1 million during the quarter and ended the fiscal year with $1.25 billion of cash and cash equivalents. Its debt balance at the end of fiscal 2008 was $1.94 billion, down $220.3 million from $2.16 billion at November 30, 2007, mainly due to the early redemption of public debt during the year. KB ended the fiscal year with no cash borrowings outstanding under its revolving credit facility and a debt to total capital ratio of 70.0%, up from 53.9% at fiscal year-end 2007.
"Housing market and general economic conditions in 2009 are expected to remain difficult or possibly worsen as the timing of any meaningful recovery for the homebuilding industry remains uncertain," said Jeffrey Mezger, president and CEO. "In 2009, we will concentrate on factors within our control, including careful financial management and prudent strategic decisions regarding inventory investments, community development, and product design, consistent with our objectives to improve our overall performance. While we welcome appropriate federal stimulus to support the housing market, we are not counting on it or passively waiting for better times."
Shares of KB were down 0.82% to $14.45 in pre-market trading.