LOS ANGELES — Residential home builder KB Home said Friday it swung to a loss in the fiscal first quarter as weak home sales amid a worsening housing market forced the company to take a large write-down related to falling home prices.
Its shares fell 3 per cent in pre-market trading.
For the quarter ended Feb. 29, the Los Angeles-based company posted a loss of $268.2-million (U.S.), or $3.47 per share, compared with a profit of $27.6-million, or 34 cents per share, a year earlier.
The latest period included a charge of $223.9-million in write-downs related to falling home prices.
Revenue tumbled 43 per cent to $794.2-million from $1.39-billion last year.
Analysts surveyed by Thomson Financial were looking for a loss of $1.17 per share on revenue of $805.7-million. The earnings estimates typically exclude one-time items.
Its shares fell 77 cents to $25.02 in pre-market trading.
Jeffrey Mezger, KB Home's president and chief executive, said a growing supply of unsold new and existing homes on the market, tight mortgage lending and industry wide discounting drove down sale prices and compressed margins during the quarter.
That forced the builder to take impairment charges and walk away from land option contracts.
“Until prices stabilize and consumer confidence returns, we believe inventory levels will remain significantly out of balance with demand,” Mr. Mezger said in a statement. “We do not anticipate meaningful improvement in these conditions in the near term, as it is likely to take some time for the market to absorb the current excess housing supply and for consumer confidence to improve.”
KB's unit deliveries fell 43 per cent to 2,928, and the average selling price dropped 7 per cent to $248,200.
Net home orders totalled 1,449, down 75 per cent from 5,744 net orders a year earlier. The sharp decline came as KB took steps to consolidate or pull out of some markets.
The cancellation rate was 53 per cent, up from 34 per cent in the year-ago quarter but down from 58 per cent in the fourth quarter.
The company's backlog, or homes under contract yet to be delivered, fell during the quarter. As of Feb. 29, the figure stood at 4,843 units, down 57 per cent from 11,183 units at the close of the same quarter last year.
KB was the latest builder to report a loss in the first quarter.
On Thursday, Miami-based Lennar Corp. reported a loss of $88.2-million, or 56 cents per share, in the three months ended Feb. 29 compared with profit of $68.6-million, or 43 cents per share, in the year ago quarter.
The company reported declines in sales, average selling price, home deliveries and new home orders during the quarter.
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