KB Home's (NYSE:KBH) fiscal third-quarter loss narrowed significantly as the builder recorded sharply lower write-downs, while orders declined again following the expiration of a federal tax credit.
Shares jumped 4.1% to $12.19 premarket as results walloped analysts' forecasts. As of Thursday's close, the stock had fallen 37% in the past year.
"Strong top-line growth in revenues, an expanded housing gross margin and lower" overhead costs drove the quarter's results, said President and Chief Executive Jeffrey Mezger.
Home builders have seen improved results recently, boosted by a rush of buyers trying to take advantage of the government's first-time home buyer tax credit before its expiration. But since the credit ended in April, home purchases have slid, and builders have seen orders slump--with KB's sliding 23% in the second quarter from a year earlier and 39% in the third.
In July, Standard & Poor's Ratings Services lowered KB by a notch, citing the company's operating difficulties because of the slower-than-expected recovery in the housing industry, with the firm saying it expects KB's bottom line to be pressured throughout 2011.
For the quarter ended Aug. 31, KB reported a loss of $1.4 million, or 2 cents a share, compared with a year-earlier loss of $66 million, or 87 cents. The results included write-downs of $3.3 million and $83.2 million, respectively.
Revenue jumped 9.3% to $501 million.
Analysts polled by Thomson Reuters had most recently forecast a loss of 15 cents on $482 million in revenue.
Homebuilding gross margin, excluding write-downs, rose to 18.2% from 14.6%.
Deliveries rose 3.6%, the second-straight quarter of year-on-year growth following 14-straight quarters of declines. The average selling price of a home rose 5.6% to $214,200, while the cancellation rate was 21%, up from 20%. At quarter's end, the company's backlog was down 42% from a year earlier at 2,169 homes.
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