KB Home said Tuesday it turned a profit in its fiscal fourth quarter, the first time since early 2007, as the homebuilder benefited from a new tax rule that allowed it to offset past losses.
The company earned $100.7 million, or $1.31 a share, in the three months ended Nov. 30. That included a tax gain of $191.7 million. On a pretax basis, KB Home lost $91 million as it abandoned land contracts and wrote down the value of joint ventures and inventory. In the fourth quarter of 2008, the builder lost $307.3 million, or $3.96 a share.
Revenue dropped to $674.6 million from $919 million in the prior year.
Analysts polled by Thomson Reuters expected a loss of 42 cents a share on revenue of $577.8 million.
"There are indications that housing market conditions may be stabilizing in some regions," said Jeffrey Mezger, KB Home's president and CEO. But high unemployment and weak economic growth could chill the recovery, he cautioned.
The Los Angeles-based company has operations in 10 states and was ranked the nation's fifth-largest homebuilder in 2008 by Builder magazine.
KB said its new home orders increased 12 percent to 1,446 in the quarter compared with the prior year, while the number of buyers canceling contracts fell to 31 percent from 46 percent.
However, those results were worse than in the third quarter, when new orders totaled 2,158 and the cancellation rate was 27 percent.
Homebuilders have seen an increase in demand in recent months due to low interest rates and an $8,000 tax credit for first-time home buyers. Buyers rushed to take advantage of the incentive before the end of November, when it was set to expire. But Congress extended the deadline through April and added a $6,500 tax credit for move-up buyers.
The race to get in before the deadline helped boost new home orders, especially at the end of October, but recent figures raised doubts about how strong demand will be in the coming months.
New homes sales tumbled 11 percent in November from October to the lowest level since last spring. The number of people preparing to buy a home in November also dropped.
For the year, KB Home lost $101.8 million, or $1.33 per share, compared to a 2008 loss of $976.1 million, or $12.59 per share.
Yearly revenue dropped to $1.82 billion from $3.03 billion in 2008.
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KB Home: http://www.kbhome.com
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