Home builder KB Home has reported $2.59 billion total revenues in the second quarter, up 22 percent from second-quarter 2005. The company also lowered its full-year earnings forecast to $10 per diluted share, which would be a 5 percent increase over 2005 earnings.
The company reported a 6 percent growth in unit delivery volume and a 15 percent increase in the average selling price. Second-quarter net income grew 14 percent from the second-quarter of 2005 to $206.6 million. Diluted earnings per share for the three months ended May 31, 2006, increased 19 percent from the year-earlier period to $2.46.
For the six months ended May 31, 2006, total revenues increased 27 percent to $4.78 billion, up from $3.77 billion for the six months ended May 31, 2005. Unit deliveries in the period rose 10 percent to 16,937, up from 15,382 homes delivered in the first half of 2005. Net income for the first half of 2006 increased 25 percent to $381 million, up from $304.3 million in the year-earlier period. Diluted earnings per share increased 29 percent to $4.48 in the first six months of 2006, up from $3.47 per diluted share in same period of 2005, KB Home also reported.
The company’s backlog totaled 27,412 units at May 31, 2006, and represented potential future housing revenues of $7.66 billion, a 13 percent increase from the $6.79 billion in backlog value at May 31, 2005. All geographic regions posted year-over-year increases in backlog value.
The average sale price grew from $247,800 in second-quarter 2005 to $284,700 in second-quarter 2006. The company’s average sale price for new homes increased 24.5 percent in the Southwest region, from $258,400 to $321,600; 22 percent in the Southeast, from $205,700 to $250,900; 11.3 percent in the West Coast region, from $450,100 to $500,900; and 2.3 percent in the Central region, from $158,300 to $161,900.
The company repurchased 2 million shares of its common stock during the three months ended May 31, 2006, for an aggregate price of $133 million. Over the six-month period ended May 31, 2006, the company repurchased 4 million shares for an aggregate price of $287.4 million. The company is authorized by its board of directors to repurchase up to an additional 6 million shares and plans to continue repurchasing its shares through the remainder of the year, the company announced.
“KB Home generated solid second-quarter financial results in a progressively more challenging housing market that is struggling to find equilibrium,” said Bruce Karatz, chairman and CEO, in a statement.
“In many regions across the country, market performance has receded from the all-time highs established in recent years, largely due to a sharp reduction of speculative purchases and an over supply in new and resale inventory. Although we do not see market conditions improving significantly in the second half of the year, we remain squarely focused on driving performance and creating shareholder value by focusing on our build-to-order business model and the value of our brand.
“After experiencing several years of accelerating demand for new homes, we are now operating in a more difficult market environment,” Karatz also said. “The country’s current-year home sales will likely fall well short of the record rates we have seen in the recent past as the market works through inventory build-ups, including a spike in investor/speculator resale inventory, higher interest rates and higher cancellation rates. The impact of higher cancellation rates is evident in the substantial year-over-year decline in our net orders in the second quarter, despite gross orders that nearly matched those of a year ago. These conditions will likely persist at least through the remainder of 2006. Yet, looking at our nation’s positive demographic trends and overall healthy economy, we remain confident in the long-term growth prospects of our company and the homebuilding industry.”
The company generated 9,908 net orders in the second quarter of 2006, a decrease of 19 percent from 12,290 net orders in the year-earlier quarter. Unit backlog totaled 27,412 units at May 31, 2006, versus 27,089 units at May 31, 2005. The company’s backlog value grew by $865.4 million, or 13 percent, to approximately $7.66 billion at May 31, 2006, from approximately $6.79 billion at May 31, 2005. Backlog values increased in each of the company’s geographic regions in the United States and France.
For the six months ended May 31, 2006, the company delivered 16,937 new homes, a 10 percent increase from 15,382 homes delivered in the first half of 2005. Total revenues for the six months ended May 31, 2006, reached $4.78 billion in 2006, up 27 percent from $3.77 billion in the six months ended May 31, 2005. Net income for the first half of 2006 increased 25 percent to $381 million from $304.3 million a year ago. Diluted earnings per share for the six-month period increased 29 percent to $4.48 in 2006 from $3.47 per diluted share in 2005.
KB Home has domestic operating divisions in: West Coast — California; Southwest — Arizona, Nevada and New Mexico; Central — Colorado, Illinois, Indiana, Louisiana and Texas; and Southeast — Florida, Georgia, Maryland, North Carolina, South Carolina and Virginia.
