KB Home Reports Quarterly Loss, Warns of Challenges

 |  About: KB Home (KBH)
by: Judith Levy

U.S. homebuilder KB Home reported a Q4 net loss last night on substantial land impairment charges and contract cancellations and warns that the next two quarters are likely to be challenging. The company took a pretax charge of $343.3 million for abandoning land option contracts and writing down inventory, practices increasingly common among homebuilders in the current environment of excess inventory and price pressures. KB Home posted a net loss of $49.6 million ($0.64/share) KB Home 14 02 2007 Chartfor fiscal Q4 versus net income of $304.4 million ($3.44/share) a year earlier; last year's results were restated following an investigation into the company's option practices that led to the ouster of long-time CEO Bruce Karatz. Revenue rose 13% to $3.55 billion but net orders fell 38%. The company saw a 48% cancellation rate in the quarter, up from 31% percent a year ago but down from 53% percent in Q3.

Sources: New York Times, Wall Street Journal, TheStreet.com. Conference call transcript: Q4 2006
Commentary: Latest Options Backdating Probe: KB HomeWeak Housing Forecasts Foretell Further DownsideHomebuilder Stocks: Is the Worst Over?
Stocks/ETFs to watch: KB Home (NYSE:KBH). Competitors: DR Horton Inc. (NYSE:DHI), Lennar Corp. (NYSE:LEN), Pulte Homes Inc. (NYSE:PHM). ETFs: streetTRACKS SPDR Homebuilders ETF (NYSEARCA:XHB), iShares Dow Jones US Home Construction (NYSEARCA:ITB)

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