Will Strong Demand Boost KB Home's Q1 Results?

(RTTNews) - Leading U.S. homebuilding company KB Home (KBH) believes it is solidly positioned for continued year-over-year growth and profit improvement in 2016. Also, the company believes the housing market is on firm ground and expects housing to continue to be a major catalyst of the economic recovery. Market conditions are expected to continue to gradually improve, supported by employment growth, increased household formation and low inflation.

The company continues to focus on increasing its revenue per community by targeting desirable new locations, offering homes designed to meet the needs of buyers and mining the opportunities for revenue enhancements such as lot and elevation premiums and studio options that are available through its Built to Order approach.

The company expects to generate housing revenues in the range of $3.35 billion - $3.65 billion for the fiscal year 2016 and in the range of $600 million - $660 million for the first quarter, as it converts its sizable backlog into homes delivered and realize continued year-over-year improvement in overall average selling price.

The company is scheduled to release financial results for its first quarter ended February 29, 2016 after the market closes on Wednesday, March 23, 2016. Analysts polled by Thomson Reuters are estimating earnings of $0.11 per share on revenue of $633.98 million. Analysts' estimate includes certain special items.

In the last quarter, the company extended its topline growth trajectory with total revenues up 24% and more than doubled its pretax income from a year ago to $70 million.

The company reported pretax income of $69.9 million, its highest fourth-quarter level since 2005 and a 144% increase from the $28.6 million reported in the year-earlier quarter.

Net income was $44.0 million, or $0.43 per share, compared to $852.8 million, or $8.36 per share, a year ago. The prior year fourth-quarter result reflected the company's reversal of $825.2 million of its deferred tax asset valuation allowance. Analysts expected earnings of $0.50 per share for the quarter.

Total revenues grew 24% from the year-earlier quarter to $985.8 million. Analysts expected revenue of $1.07 billion for the quarter.

KB Home reported that its fourth-quarter housing revenues rose 25% to $979.8 million from $783.5 million in the fourth quarter of 2014, driven by increased delivery volume and a higher overall average selling price. The company delivered 2,580 homes, up 16% from 2,229 a year ago, representing its highest number of fourth-quarter deliveries since 2009.

The company ended the quarter with unrestricted cash of $559 million and total liquidity in excess of $810 million including the unused capacity under its unsecured revolving credit facility.