KB Home faces Decline in Net Profit for first quarter

On Friday, home builder KB Home said that it has faced a 26% decline in net profit for the first quarter from last year. The company has reported first-quarter net income of $7.80 million or $0.08 per share, down from $10.56 million or $0.12 per share in the prior-year quarter.

The decline is considered to be due to increased tax expenses and reduced margins more than strong revenue growth. But twist came in as earnings have surpasses the expectations of analysts, which has led to the stock higher.

Jeffrey Mezger, president and chief executive officer, was of the view, "We are pleased with the robust growth in our first quarter net orders, net order value and backlog levels, which was fueled primarily by our expanded community count and healthy buyer demand".

Thomson Reuters carried out a poll in which 18 analysts were involved. As per the poll, analysts expected that the company should report profit share of $0.02 for the quarter. The total revenues for the quarter increased 29% amounting to $580.12 million from $450.69 million in the same quarter last year.

Experts said that it surpassed the analysts' estimations of $474.90 million. It is said that the growth happened due to the company's housing and land sale revenues. Not only this, the company has also reported higher home deliveries and selling prices during the period.

Mezger affirmed that they are expecting to have sequential margin improvement in each of the remaining quarters of this year. They also aim to reduce the year-over-year gap in their gross margin percentage by the end of this year.

The company said that the net orders for the quarter have increased 24% to 2,189 homes and net order value increased 25% to $753.18 million.