KB Home Announced Fourth Quarter and Fiscal Results
KB Home (NYSE: KBH) reported Q4 earnings ahead of the opening bell on Thursday.
KB Home's cash, cash equivalents, and restricted cash increased by $147.1 million from August 31, 2013 to $572 million. This is a result from the received net proceed from the issuance of $450 million in 7% senior notes due 2021, partially offset by the retirement of $215 million in aggregate principal amount of certain of KB Home's senior notes due in 2014 and 2015.
Inventories increased from $1.71 billion to $2.30 billion from last year.
Jeffrey Mezger, president and chief executive officer of KB Home commented, "Our fourth quarter results provided a solid finish to 2013 with both revenues and profits up from the prior year. We also posted full-year net income for the first time in several years. These results reflect the positive momentum within our business throughout 2013 that delivered measurably improved financial performance, with higher revenues and better bottom-line results in each quarter of the year."
Summary of Fourth Quarter Results:
- Total revenues rose from $578.2 million to $618.5 million, a 7% increase, but missed the estimated $662.46 million. KB Home noted that the decrease in the West Coast homebuilding region was offset by double-digit increases in the Central, Southeast and Southwest regions.
- Earnings per share were up 210% from the same quarter last year.
- Homes delivered decreased 4% from 4Q12
- All regions posted higher average selling price by 10-29% compared with the fourth quarter in 2012.
- Homebuilding operating income improved by 490 basis points to 7.6%, compared to 2.7% in 4Q12.
- Net income increased from $7.7 million to $28.1 million.
Summary of Fiscal Year Results:
- Total revenues rose from $1.56 billion to $2.10 billion, up 34% from 2012.
- Overall average selling price rose 18% to $291,700 from last year.
- Homed delivered increased from 6,282 to 7,145, up 14%.
- Homebuilding operating income improved by 570 basis points to 4.4%, compared to -1.3% for 2012. This reflects a higher gross profit margin and great improvement in KB Home's administrative, general, and selling expense ratio.
- Housing gross profit margin improved 270 basis points to 16.7%. The adjusted margin was up 490 basis points to 18.4%
- Administrative, general, and selling expenses improved 300 basis points to 12.3% from 15.3% last year.
- Net income increased from a net loss of $59 million for FY12 to $40 million in FY13. FY2013 results include a $1.6 million income tax benefit.
Additional Management Comments:
- Jeffrey Mezger commented on the progress of the company adding, "The catalyst for this progress has been an ongoing strategic shifting of our operations to higher-performing markets across the country. The favorable impact of this approach was most evident in California, where our average selling price for the quarter increased 29% from a year ago to $524,200. Our results for the fourth quarter and full year reinforce our belief that we have the right strategies in place to create long-term value for our stockholders as the housing recovery progresses."
- As a preview for next year, Mezger noted, "Looking forward, we believe we are well positioned operationally and financially for 2014. We enter the new fiscal year with a strong land portfolio that supports our plans for community count growth as the substantial investments we have made in land and land development convert to open communities. In addition, we will continue to execute on our key growth initiatives, making investments in desirable land positions, optimizing our selling prices and sales pace in each community to generate higher revenues, and leveraging our growth platform and the efficiencies of our operational business model to enhance profitability."
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