KB Home Beats Q2 Expectations, Shares Surge

Shares of

surged more than 4 percent in pre-market trading after the company reported stronger-than-expected results for its second quarter. The Los Angeles, California-based company posted quarterly net income of $9.6 million, or $0.10 per share, compared to $26.6 million, or $0.27 per share, in the year-ago quarter. Its revenue rose 10 percent year-over-year to $622.9 million from $565.0 million. However, analysts were expecting earnings of $0.08 per share on revenue of $619.05 million. The average estimate among 8 Estimize users was for earnings of $0.10 per share and revenue of $657.49 million. Housing revenue surged 8 percent to $604.9 million from $559.8 million. KB Home delivered 1,787 homes in the latest quarter, up 2 percent versus 1,751 homes in the year-ago quarter. Average selling price of homes delivered gained 6 percent to $338,500 from $319,700. Net orders climbed 33 percent to 3,015 in the latest quarter, from 2,269, a year ago. Homebuilding operating income slipped to $17.9 million, versus $34.3 million in the year-ago quarter. Housing gross profit margin shrank to 16.0 percent from 18.9 percent. At May 31, 2015, the company's backlog rose 39 percent to 4,733 homes, versus 3,398 homes at May 31, 2014. At May 31, 2015, the company had $467.1 million in cash, cash equivalents and restricted cash, versus $383.6 million at November 30, 2014. "Our strong net order performance during the spring selling season underscores the success of our community expansion initiative and the broad appeal of our products and distinctive home-buying experience, as well as healthy demand in our served markets," said Jeffrey Mezger, president and chief executive officer of KB Home. KB Home shares climbed 4.46 percent to $15.63 in pre-market trading.